Q4 2024 Stran & Co Inc Earnings Call
Good morning, everyone and welcome to the strata and company fiscal year 'twenty to 'twenty four earnings conference call.
At this time all participants are in a listen only mode and the floor will be opened for questions. Following the presentation. If anyone should require operator assistance. During this conference. Please press star zero on your phone keypad. Please note. This conference is being recorded.
Alexandra: I'll now turn the conference over to your host Alexandra.
Speaker Change: Alexandra the flow issue.
Alexandra: Thank you good morning, and thank you for joining straughn and company's year end 2024 financial results and business update conference call with US today are Andy shape, Chief Executive Officer, and David Brown, Our Chief Financial Officer.
Alexandra: The company issued a press release yesterday April 14th 2025 detailing its financial results for the year ended December 31 2024.
Alexandra: The release is also available on its website. If you have any questions. Following today's call or would like additional information. Please contact crescendo communications at 2126711020.
Alexandra: Today's remarks will include a review of strong financial and operational performance followed by Q&A session. Please note that the company may make forward looking statements during the call that involves risks and uncertainties many of which are outside of its control. We encourage you to review <unk> filings with the SEC for a full discussion of these risk factor.
Alexandra: <unk>.
Andy: With that I'll now turn the call over to Andy shape. Please go ahead Andy.
Andy: Thank you Allie and good morning, everyone.
Andy: Really pleased to be back with you and resume our quarterly conference calls I'd like to begin by discussing the critical event that shape much of our internal focus in 2020 for the comprehensive re audit of our historical financials.
Andy: This process became necessary after the SEC BARDA previous audit firms working with public companies. While this disruption was entirely out of our control.
Andy: a firm from working with public companies. While this disruption was entirely out of our control, we responded with transparency and urgency.
Andy: It included thorough internal control testing and documented documentation reviews, while the process temporarily diverted resources and pause certain growth initiatives. It ultimately reinforced the strength and reliability of our financial reporting infrastructure.
Andy: Today strong operates with upgraded compliance protocols greater internal controls and a more credible audit partner enhancements that will serve as a foundation for future growth and investor confidence.
Andy: I'll go through our financial performance and strategic highlights. Despite these internal demands 2024 was a year of meaningful progress. We reported revenues of $82 7 million, which was an eight 8% year over year increase in gross profit of $25 8 million, achieving a 31, 2% gross margin.
Andy: These results underscore the strength of our business model and the dedication of our team.
Andy: A highlight of the year was our acquisition of Gander group assets in August 2020 for Gander is a highly respected loyalty incentive and merchandize provider in the gaming sector vertical we view as a rich with opportunity and just a few months post acquisition through the end of 'twenty 'twenty four Gander contributed $9 9 million in revenue and it has become a key pillar.
Andy: Of our newly established strong loyalty solutions.
Andy: Also known as Sos segment.
Andy: With Gander, we're expecting our addressable market diversifying our customer base and gaining deeper penetration and experience driven industries.
Andy: Also began to build cross selling Britney between Gander and legacy strong accounts, creating synergies we expect to further develop in 2025 and help us drive towards our next milestone of $100 million in annual revenue.
Andy: From a profitability standpoint, gander operated somewhat lower gross margin profile, reflecting a different mix of product categories and pricing dynamics, but enhances our total revenue base and expands our addressable market.
Andy: Most importantly, it has validated our belief that targeted well integrated acquisitions can accelerate both our topline and strategic momentum without compromising quality or culture.
Andy: In 'twenty 'twenty four we also secured multiple six figure multiyear contracts across sectors, such as residential real estate diagnostics public transportation and premium consumer products. These wins reflect both versatility of our platform and our reputation as a trusted partner not just a vendor.
Andy: Through existing relationships with large enterprise clients across across sectors, including automotive infrastructure and energies.
In many cases, our work has evolved beyond branded merchandize digital store management loyalty platforms and data driven campaign execution.
Andy: This evolution speaks to the scalability of our solutions in the long term stickiness of our customer relationships.
Andy: One of our new partnerships with the national residential housing developer or a company that is expanding across multiple U S markets. It needed a scalable branded merchandize solution for kind of engagement internal Onboarding and community program, we were able to deliver a centralized promotional platform that integrates seamlessly with their operations and align with our brand vision.
Andy: Another standout when was it was with a molecular diagnostics company. This client was looking for a creative and comply away to support patient outreach programs and provide engagement across the country.
Andy: Through a combination of curated merchandise kids fulfillment and real time reporting tools, we provide a turnkey solution that address both their marketing and regulatory needs.
Andy: And then the compute and the consumer product space, we began working with the premium recreational watercraft manufacturer that's selected strong branded merchandise partner.
Andy: This client was drawn to our fulfillment capabilities, particularly for high end dealer focused merchandise programs that require customized customization and precision logistics in total these wins will represent millions of dollars in potential recurring revenue diversified across industry and geography.
Andy: Shifting to technology advancements and operational enhancements one of our most significant milestones in 2024 was the preparation of our Netsuite ERP culminated culminating with the successful launch of <unk> in January 2025.
Andy: Enterprise wide platform is a tremendous step as we look to replace legacy tool that will automate many processes and centralize our operations next.
Andy: <unk> is already delivering greater visibility more automation and accuracy across departments. It also has improved our ability to respond quickly to client needs.
Andy: For higher volumes and scale efficiently.
Andy: It'll be the cornerstone of our efforts to drive operational excellence in 2025.
Andy: As we look towards the remainder of 2025 operating efficiency will be a major area of focus with the Gander acquisition integrated naturally lives and compliance investments behind US. We're now 'twenty are turning our attention towards expense management process streamlining and margin expansion.
Andy: We believe this discipline will position us trying to convert more top line.
Andy: Revenue in the Bottomline performance, improving profitability, while maintaining strong customer experience.
Andy: For our strategic priority for 2025, moving forward, our strategic roadmap is clear and actual built around multiple core principles first we want to accelerate growth across both from and otherwise by executing on a robust and our enterprise sales pipeline second.
Andy: Second we look to broaden our customer base and a high potential verticals like hospitality health care.
Andy: Infrastructure and gaming.
Andy: Third we look to deepen existing client relationships by expanding our service portfolio to areas like loyalty programs analytics branded customer experiences.
Andy: First leverage our technology stack, particularly net suite to enhance operational efficiency and improved fulfillment performance and fifth operate optimize operating expenses across both segments with a focus on sustainable margin accretive growth.
Andy: Collectively these priorities position us to execute with more precision scalability and client impact than ever.
Andy: In terms of microeconomic macroeconomic and Ford outlooks, we recognize the broader macroeconomic environment remains a complex.
Andy: Ongoing inflationary pressure as global trade disruptions of tariff related costs continue to create uncertainty across all industries. However, we believe strong is very well positioned to navigate these challenges are diversified climate client base strong cash position zero long term debt and scalable operating model provide us with flexibility and resilience.
Most importantly, we remain committed to delivering value to our customers and long term returns to our shareholders.
Regarding tariffs the recent terrorist strong has consistently demonstrated the agility creativity and operational discipline needed to navigate an evolving global trade environment, we've been proactively preparing for potential tariff increases and supply chain disruption and we've already done and executing on those contingency plans.
Andy: These efforts have included expanding our domestic sourcing diversified manufacturing partners tightening cost controls and maintaining clear transparent communication with our customers. Our prior year's did short continent continuity value and quality for our customers without compromising our profitability ultimately our guiding principle remains the same.
Andy: Deliver high impact high quality branded solutions in the most efficient and resilient way possible.
Andy: I'd also like to briefly address the share of or the status of our share repurchase program due to trading restrictions related to the re audit of our historical financials, we were unable to execute any share repurchases during 2024.
Andy: That said strong board previously authorized a $10 million share repurchase program and as of year end 2020 for approximately $6 6 million of that authorization remains available with 2024, all audit process now behind us and a more stable operating environment ahead, we intend to resume our buyback efforts in 2025.
Andy: We view this as an important lever to enhance shareholder value and reflect our confidence in the company's long term prospects.
Andy: We view 2025 is a pivotal year, one of which will begin to fully realize the strategic investments made over the past 18 months I'm confident that we're turning the corner towards more efficient scalable and profitable phase of growth.
Speaker Change: With that I'll now turn the call over to our CFO, David Brown or to walk through the financial results in more detail. David. Please go ahead.
David Brown: Thank you Andy.
David Brown: Sales increased eight 8% to approximately $82 7 million for the year ended December 31, 2024 for a product from approximately 76 million for the year ended December 31 2023.
David Brown: Sales from the Strand segment decreased to approximately $72 7 million for the year ended December 31, 2024 from approximately 76 million for year ended December 31, 2023 sales from the Strand loyalty solutions segment increased to approximately $9 9 million from you.
David Brown: Your ended December 31, 2024 from zero in the year ended December 31, 2023, the increase in the total sales was primarily due to the acquisition of the Gander group assets in August of 'twenty 'twenty four for.
David Brown: For the <unk> segment. The decrease in sales was primarily due to lower spending from new and existing clients for the SLS segment. The increase is the increase in sales was due to the acquisition of Baganda group assets in August of 'twenty 'twenty four.
David Brown: Gross profit increased three 9% to approximately $25 8 million or 31.2% of sales for the year ended December 31 2024.
David Brown: From approximately $24 9 million or 32, 7% of sales for the year ended December 31 2023.
David Brown: Gross profit of the Strand segment decreased to approximately 30 or $23 7 million for the year ended December 31, 2024 from approximately $24 9 million for the year ended December 31, 2000 22023.
David Brown: The gross profit of the <unk> segment increased to approximately $2 1 million for the year ended December 31, 2024 from zero in the year ended December 31, 2023, the increase in the dollar amount for the total gross profit was primarily due to the acquisition of the Gander group assets in August 2024.
David Brown: For the Strand segment the decrease in the dollar amount of the gross profit was due to the decrease in sales of approximately $3 3 million, which was primarily offset by a decrease in cost of sales of approximately $2 2 million.
For the SLS segment the increase in the dollar amount of gross profit was due to the acquisition of the Gander group assets.
David Brown: In August of 2020 for.
David Brown: The decrease in the total gross profit margin to 31.2 for the year ended December 31, 2024 compared to $32 seven for the year ended December 31, 2023 was primarily due to the acquisition of the Gander group assets in August of 'twenty, 'twenty, four which operates at a lower gross profit margin and strand demonstrating second.
David Brown: <unk>.
David Brown: The gross profit margin for the <unk> segment remains unchanged at 32, 9% for the year ended December 31, 2024 in December and 2023.
David Brown: The gross profit margin for the SLS segment was 28% at year end December at year end December 31 2024.
David Brown: Operating expenses increased 17, 6% to approximately $30 7 million for the year ended December 31, 2024 from approximately $26 1 million for the year ended December 31 2023.
David Brown: Operating expenses for the Strand segment increased to approximately $27 6 million for the year ended December 31, 2024 from approximately $26 1 million for the year ended December 31 2023.
David Brown: Operating expenses of the SLS segment increased to approximately $3 1 million for year ended December 31, 2024 from zero for the year ended December 31 2023.
David Brown: As a percentage of sales operating expenses increased to 37, 2% for the year ended December 31, 2024 from 34, 4% for year ended December 31 2023.
Speaker Change: As a percentage of sales operating expenses for the Strand segment increased to 37 nine for the year ended December 31, 2024 from 34.4 for year ended December 31 2023.
Speaker Change: As a percentage of sales operating expenses for the S. L segment were 31, 4% for the year ended December 31 2024.
Speaker Change: For the Strand segment the increase in the dollar amount of operating expenses was primarily due to expenses related to the strands net suite enterprise resource planning system implementation acquisition and integration of the Gander group assets and legal and accounting expenses related to the re audit of historical financial statements.
Speaker Change: For the SLS segment the increase in the dollar amount of the operating expenses was due to the acquisition of the Gander group assets in August 2024.
Speaker Change: Net loss for the year ended December 31, 2024 was approximately $4 1 million compared to approximately 0.4 million for year ended December 31, 2023. This change was primarily due to the increase in operating expenses, including extraordinary extraordinary professional fees related to the Riyadh.
Speaker Change: And successful completion of the acquisition of the Gander group.
Speaker Change: At December 31, 2024, the company had approximately $18 2 million of cash cash equivalents and investments and no long term debt.
Andy: At this point I'll turn the call back over to Andy.
Andy: Thank you David before we open up the call to questions I want to take a moment to recap what we've covered today.
Andy: We made significant strides over the past year successfully completing a complex, but our central re audit process that is strengthen our financial foundation and internal controls we.
Andy: We delivered solid full year results, including $82 7 million in revenue and completed the strategic strategic acquisition of Grant Gainer group, which has already begun to contribute meaningfully to our growth. We also secured new long term client partnerships across diverse and high potential industries importantly, we achieved this growth while maintaining a strong balance sheet.
Andy: The cash position no long term debt and a scalable automated operating model that positions us well for the future as.
Andy: As we look ahead, we're focused on execution growing our core business scaling our new Sos segment, expanding into new markets and driving operating efficiencies. We believe 2025 will be a transformational year for Sean a true inflection point as we shift from a period of foundational investment to one of the strategic acceleration our team is energized our platform.
Andy: It's stronger than ever and we are well positioned to lead in an evolving marketplace park marketplace, while the broader macroeconomic environment remains uncertain with inflation tariffs global supply chain dynamics continue to present headwinds, we remain confident in our ability to adapt to deliver and grow our diversified business strong balance.
Andy: Sheep and scalable infrastructure give us some resilience to thrive even in challenging conditions.
Andy: Thank you again for joining us today and for your continued interest in strong with that we'll now open it up the up the call to questions.
Andy: Operator.
Speaker Change: Thank you very much we are now opening the floor for questions. If you would like to ask a question you can please press star one on your phone keep up now a confirmation tone will indicate that Youll line isn't the key you May press star two if you would like to Randy's question from Nicky.
Speaker Change: Any participants using speaker equipment, it may be necessary to pick up your handset before pressing the keys teeth weight amendment, whilst we poll for questions.
Speaker Change: Thank you. Our first question is coming from Bill Jordan of TSA investments Bill Your line is life.
Speaker Change: Thank you congratulations on getting through that re audit I'm sure. It was a major distraction for the company. Obviously there were a lot of one time expenses during the year.
Speaker Change: Look ahead can you just provide some light on your goals for profitability this year coming forward.
Speaker Change: Sure Yeah. So thank you, yes that was a a heavy lift on our ended and I'm really proud of our team for the resiliency that we put towards getting that re audit done it took a lot of focus energy.
Speaker Change: Time and resources to put towards that but it was a necessary step to maintain.
Speaker Change: Maintaining and preserving shareholder value in the public company that we have in that in the long term success. So we did put a lot of energy that so in terms of our profitability efforts. This year first and foremost are the fees associated with.
Speaker Change: The audit itself will inherently go down because we don't have to do a reorder the nearly three years instead well we're in a cadence now a new audit firm.
Speaker Change: No. It was more about our business we have outside.
Consultants that understand our business and really have better process controls in place. So first and foremost those fees will drop significantly both from a hard dollar and then from a soft dollar perspective, it will allow myself as CEO, David as the CFO and in our other executives to concentrate more on the operating business, but on the re audit so.
Speaker Change: That allows us to go manage our opex make adjustments where necessary as well as concentrate more on our revenue growth and profitability growth by driving margins.
Speaker Change: Targeting additional customers and really looking towards growing the business. So you know those are those are some of the things that we're able to do for profitability and when we look at our goals. This year. Our goals are to continue to have revenue growth, while driving revenue and creating operational efficiencies and the final aspect is the final implementation of Netsuite. So it's taken us.
Speaker Change: As to implement next week, because we have combined over hundreds of years of with all the acquisitions together of a business working separately now that we have net suite as a central hub for all that data to go into it allows us to create efficiencies create automation and really reduce some of the manual work that goes into some of the legacy.
Speaker Change: Business that we have that now we're able to automate and really create more efficiencies driven that so that's the first step was having that suite as our as a core base system to build off of and we're really excited about the progress that we've made and the potential future.
Speaker Change: You can see that we can gain for that so hopefully that answers. Your question about you know, how we're going to really concentrate on reducing opex, while continuing to maintain growth and that's a combination.
Speaker Change: Nation that we're looking for is continuing to grow the company increase our margin our gross margin and increase our net margin by reducing operational expenses.
Speaker Change: Thank you very much that was that was great that clears it up for me. Thank you.
Speaker Change: Yep.
Speaker Change: Thank you very much just to remind you that if anyone has any remaining questions. You can join the queue by pressing star one on your phone keypad now.
Speaker Change: Yes.
Speaker Change: Not seeing anyone else come into queue just at the moment.
Speaker Change: And hand back over to the management team for any further comments.
Speaker Change: Great well. Thank you everybody for joining us I'm glad to be back it's been over a year since we've had a earnings call it's exciting to be back.
Speaker Change: Planning, what what's drawn is doing and giving everyone visibility of what we're doing.
Speaker Change: Thank you for your support of strong were very excited about 'twenty, two but the rest of 2025 being able to get back to concentrating on our business concentrating our growth concentrating on reducing our operational.
Speaker Change: Expenses and create gain operational efficiencies.
Speaker Change: It really create long term shareholder value. This is a business that's been in business for 30 years. If we look at the macroeconomic trends that are happening right now there's some uncertainty, but that's where we thrive we have flagged in the past and we're looking at we're planning on doing that moving forward, where we're well positioned with a strong team a leadership team and a management team that knows how to.
Speaker Change: Really continue to to grow business and capture market share when things may be uncertain, because we're not in sort of uncertain about the future of strong there maybe some very short term uncertainty about the macroeconomic trends but.
Speaker Change: That doesn't deter us from the long term.
Speaker Change: Value that we know strong has and more competent and so we're very excited about 2025 being able to get back to work.
Speaker Change: What we do best and thank you for everyone's supporting us and look forward to giving more reports in the future. Thank you for your time and talk to you soon.
Speaker Change: Thank you very much. This does conclude today's conference you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Speaker Change: Thank you.