3/28/2022

speaker
Operator

Good day, ladies and gentlemen, and welcome to the Strand and Company Fiscal 2021 Year-End Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Waldman, Investor Relations. Sir, the floor is yours.

speaker
David Waldman

Good morning, and thank you for joining Strand and Company's 2021 Year-End Financial Results Conference Call. On the call with us today are Andy Shape, Chief Executive Officer, and Chris Rollins, Chief Financial Officer. The company issued a press release today, Monday, March 28th, containing 2021 year-end financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. The company's management will now provide prepared remarks reviewing the financial and operational results for the year ended December 31, 2021. Before we get started, we would like to remind everyone that during this conference call, we made forward-looking statements regarding timing and financial impact of Strong's ability to implement its business plan, expected revenues, and future success. These statements involve a number of risks and uncertainties and are based on assumptions involving judgments with respect to future economic, competitive, and market conditions and future business decisions. all of which are difficult or impossible to predict accurately, and many of which are beyond Strawn's control. With that, we'll now turn the call over to Andy Shape, Chief Executive Officer. Please go ahead, Andy.

speaker
Andy Shape

Great. Thank you, David, and thanks to everyone for joining us on our first ever conference call. We've had some very exciting developments. We want to take this opportunity to provide an update on our progress and answer questions from investors. I'm pleased to report that we achieved year-over-year increases in revenue growth and gross profit and once again achieved profitability for the full year. While we achieved 5% revenue growth, our recurring organic sales defined as sales excluding the U.S. Census program, revenue from the Wildman Imprints asset acquisition and personal protective equipment increased roughly 50% to $31.2 million for the year ended December 31st, 2021. We achieved this strong organic growth despite the impact of the pandemic and while preparing for our IPO. In addition, we're off to a very strong start to 2022 as employees return to the workplace and there are more and more in-person events. As a result, we expect to achieve double-digit year-over-year organic growth in 2022. As an example of the traction we're gaining in the market in January, we announced that we were selected by a large nationally recognized healthcare company to provide an incentive product and literature design to help drive consumer and health behaviors. Due to contractual obligations, we are not able to disclose the specific name of that customer, but this new multi-year contract is projected to generate over $6 million in annual revenue with potential expansion of that opportunity as well. Signing the contract with this new customer illustrates our shift from largely transactional sales to program offerings with long-term recurring revenue streams. We believe the healthcare market represents a significant yet largely untapped opportunity to utilize promotional products to help drive positive and healthy consumer behaviors. In addition, over the past few weeks, I'm pleased to report we have had an amazing success in booking new business. We've picked over 4.5 million in February alone, which is our third highest month of bookings in the company's history. And with almost a week left in March, we're on pace to surpass that and have the second largest month of bookings in the company's 26-year-plus history in March. It's important to note that this won't turn into build revenue until the products are delivered over the next few months, However, this trend is extremely encouraging. I'd like now to review some of the ways we've achieved this success and discuss our plans moving forward. We respond to the challenges resulting from COVID-19 pandemic by developing a clear company-wide strategy and sticking to our core value of delivering creative merchandise solutions that effectively promote our customers' brands. In addition to branded products, we offer clients a flexible and customizable e-commerce platform for order processing, creative and merchandising solutions, warehousing, fulfillment, and distribution services, custom sourcing capabilities, print-on-demand, kitting and assembly services, point-of-sale displays, loyalty incentive programs, and much, much more. As you can see, we are now able to offer our customers a true one-stop solution. For this reason, we are investing heavily in sales and marketing, differentiating ourselves as a service-driven industry. feature-rich, and customer-focused company that provides our customers with more than just products. In addition to broadening our customer base, we are deepening our penetration with existing customers, giving our compelling value proposition and comprehensive offering to address the complex marketing needs of our customers. In addition to organic growth, we are pursuing M&A opportunities that would be highly synergistic with our existing operations. We now have a proven track record of identifying and acquiring companies at attractive multiples, as well as integrating these companies into our operations. As an example, in September 2020, we acquired Wildman Imprints in Warsaw, Indiana. As a result, we gained over 1,400 customer accounts, including over 120 customer programs with high repeat business potential. This acquisition allowed us to extend our geographic reach into the Midwest and further diversify our customer base. More recently, in January 2022, we acquired Gap Promo, a leading full-service promotional agency that generated over $7 million in sales in 2020 and 2021. This acquisition adds an impressive roster of top-tier beverage and consumer packaged goods clients. Gap Promo's expertise in point of sale, display, racks, and more will also expand our reach within the beverage and consumer packaged goods sectors. We expect this transaction to be highly accretive given GAP's promo track record of profitability since their inception in 2006. Importantly, Gail Pereno, founder and president of GAP, will continue with the company to help lead GAP's promo business. It's important to note that our strategy is not to gut the acquired companies, but rather leverage the assembled talent to accelerate growth across the organization and repurpose people where appropriate in order to create incremental revenue and increase profitability opportunities. Through this growth, we expect to benefit from a meaningful economies of scale. So to summarize, over the past 25 years, we have successfully positioned STRON as a leading provider of outsourced marketing solutions, including a growing roster of Fortune 500 customers. These entities have identified STRON's offerings to be unique in demand and of significant commercial value. The promotional products industry represents an enormous opportunity for STRON as there is no strong leader in this industry. The promotional products industry alone is valued at over $23 billion, and yet the market is highly fragmented and comprised of more than 40,000 providers. We believe the market is ripe for consolidation, and the combination of our offerings is designed positions strong at the forefront of the industry. In addition, we are expanding within the broader $387 billion product packaging, loyalty incentive program, printing, and trade show markets. Looking ahead, we are extremely encouraged by the outlook. We believe that we have seen encouraging signs of recovery from the effects of COVID-19 pandemic. There has been significant increase in the amount of requests for proposal, which leads us to believe that companies are preparing to spend at increased level, especially as employees return to the office and there are more in-person events, including conferences and trade shows. We are at the right place at the right time. In order to capitalize on this opportunity, we're making key hires to support and accelerate our growth even further. I'm pleased to welcome industry veteran Sheila Johnshoy, as Chief Operating Officer. Sheila brings over 20 years of leadership and successful track record in the B2B promotional products industry. Among her many accomplishments, she led two industry startups, one of which was a public company, which was successfully acquired. She also brought two of the world's largest retailers into the promotional products industry. While at Harlan Clark, she helped grow revenues from startup to $8 million within the first 12 months alone. In addition, we hired Steve Paradiso as our chief of staff, bringing over 30 years' experience and success to support the acceleration of Strawn's growth strategy. Prior to Strawn, Steve served as an executive at Top 40 Players ePromo and Touchstone. Both organizations were generating less than $15 million in annual revenue before his involvement, and by the time he left, each was generating over $70 million per year. Mr. Paradiso also served as the president of NASDAQ-listed CERC from 1988 to 2001, which became one of the largest promotional companies ever in the world with over 2,000 employees and achieving almost $1 billion in annual revenue while serving multiple national clients. We rounded out our additions to our executive team by adding Jason Nally as our CTO and Steve Ury as our Vice President of Sales. Both have extensive experience and proven track records of delivering sales, operational, and technological leadership. Turning to our balance sheet, we're in a very strong financial position with over 32 million in cash and cash equivalents, approximately 40 million of working capital, and no debt as of December 31st, 2021. As a result, we believe we are well capitalized to accelerate both our organic growth and our M&A strategy, including investments in new sales and marketing initiatives, as well as our technology infrastructure to drive even greater operational efficiencies. We're also actively evaluating additional M&A opportunities. We believe our strong, solid cash position provides us with flexibility and ability, but not the need, to leverage debt for acquisitions, which we believe is a distinct competitive advantage in this market. On a final note, given the strength of our balance sheet, our board recently approved a share repurchase program of up to $10 million. I'd like to point out we have not yet been able to utilize this buyback due to blackout restrictions surrounding the filing of our 10-K. However, absent of any potential material developments that may impose additional blackout restrictions, we expect to be in a position to utilize this program in the very near future. While we remain focused on preserving capital, we believe our strong cash war chest and track record of profitability provides a unique opportunity to take advantage of the volatility in the capital markets. Through strategic opportunities, use of this program, especially considering the price of the IPO and private placement, which are considerably higher than the current share price. We remain 100% committed to driving value for our shareholders, and I can assure you that management and our shareholders are in complete alignment. We could not be more excited about the future for our business and believe 2022 will be a transformative year for the company. At this point, I'd like to turn the call over to our Chief Financial Officer, Chris Rollins, to go over our financials in detail. Please go ahead, Chris. Thank you, Andy.

speaker
David

Revenue for the year ended December 31st, 2021 increased 5.2% to $39.7 million from $37.8 million for the year ended December 31st, 2020. The increase was partially due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the Wildman Imprints assets in September 2020. However, these increases in sales were partially offset by the completion of the U.S. Census program in 2020, market saturation of personal protective equipment in 2021, a lack of in-person events, and business still not being fully reopened through 2021 as a result of the COVID-19 pandemic. 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. Operating loss for the full year 2021 was 438,000, compared to an operating profit of approximately $1.5 million for the same period last year. 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. Net income for the year ended December 31st, 2021 decreased to approximately 235,000 compared to a net income of approximately 1 million for the same period last year. This decrease was primarily due to the non-recurrence of sales of 10.5 million from our work on the US Census program in 2020 and the non-recurrence of sales of $4 million from our work on personal protective equipment in 2020. Increased expenses in 2021 then in 2020 related to our initial public offering and higher freight expenses in 2021 compared to 2020. These factors were only partially offset by increased sales in 2020 to 2021 of $6 million from our September 20 Wildman Imprints asset purchase in the increase of $10.3 million from recurring organic sales from 2020 to 2021. Now I would like to turn your attention to liquidity and capital resources. As of December 31, 2021, the company had cash and cash equivalents of approximately $32 million, approximately $40 million of working capital and no long-term debt. Given the strength of our balance sheet, we recently announced a share repurchase program of up to $10 million, and as Andy mentioned, expect to be in a position to utilize this in the near future. At this point, I'll turn the call back over to Andy.

speaker
Andy Shape

Thank you, Chris. In conclusion, although we faced challenges during the pandemic, we recorded solid financial results for the year 2021. We're especially encouraged by the macro trend as employees return to the workplace and there are more and more in-person events. We believe we are well positioned in 2022 to take advantage of our unique position to accelerate growth as a leading provider of outsourced marketing solutions, given our compelling value proposition and comprehensive offering to address all the needs of our customers under one roof. With a strong balance sheet, we are well capitalized to execute on all of our organic growth strategies while continuing to actively pursue through synergistic mergers and acquisitions and have no plans to raise additional capital. We remain committed to driving shareholder value and look forward to providing further updates as developments unfold. I'd like to thank you for joining the call today. At this point, we would like to open the call for questions.

speaker
Operator

Operator? Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone now. We do ask that if you are listening via speakerphone to please pick up your handset for optimum sound quality. If you wish to leave the queue, you may press star two. Once again, if you have any questions or comments, please press star one now. Our first question today is coming from Eddie Riley at EF Hutton. Your line is live. You may begin.

speaker
Eddie

Hey, guys. Congrats on the strong year. Just wondering if you could provide us with some color on the strength of the current acquisition pipeline and the multiples you're seeing in the market currently.

speaker
Andy Shape

Sure. Thank you, Eddie. Yes, we're excited about the year. And as mentioned, merger and acquisition strategy is something that we really look to accelerate our growth. And as I'd mentioned, there's 40,000 players within the industry. And we're number 32 as voted by Advertising Specialties Institute. So we're well positioned to already be a leader, yet there are a lot of smaller players out there. So Our pipeline for acquisitions is very strong. I'm meeting with dozens per week or speaking with dozens per week about opportunities out there, and it's very strong. In addition, we're part of a group called Facilis Group, which has over between 100 and 150 distributors within our organization that some of them are looking to formulate an exit. Some of them are looking to be bought out. Some of them have struggled during COVID. So they may have COVID fatigue and have had a difficult time. We also believe that interest rates going up may cause some companies not be able to finance their operations like they have been. So we found that that's a very unique position that we're in with such a strong balance sheet, such a strong cash position. In addition to that, you'd ask about the multiples. So a lot of the acquisitions that we're looking at are essentially self-funding, where we may have to put up a little bit of cash up front A lot of times we have to only do a two to four year earn out where it's almost self funding. You know, the multiples within this industry may be anywhere from, say, three to six times EBITDA that we're looking at right now of purchasing them. It can be higher at times, but that's really what we may be looking at for multiples. So we're really excited about the acquisition opportunities that we have right now. We are taking our time to find the right opportunities. we're not just looking to to go add on buy revenue we want to buy a creative revenue that also fits in with our long-term strategy so we're being very selective about who we choose so that they're really part of our greater growth strategy and growth plan gotcha gotcha thanks for that and um on integration um with the two uh most recent acquisitions of gap and wildman i was wondering um you know what

speaker
Eddie

How long that takes and if there are any surprises along the way and maybe what the new ERP system might do to alleviate some integration?

speaker
Andy Shape

Absolutely. Great question. So when we acquired Wildman back in 2020, we recognized very quickly that in order to continue to do that more efficiently and more effectively, we had to increase our ERP, including our accounting software. So we went out and vetted quite a few providers and ended up on Oracle's NetSuite to implement as an ERP. That should make it much easier for us to integrate as well as have more visibility. So that is one initiative that we started back in March of 2021. We're expecting at the end of Q2 to go live with that with NetSuite as our ERP. So we spent the last year and a half or a little bit over a year implementing that and that will help a lot. So what that will allow us to do is take different outputs from existing platforms that some of our acquisition targets may have and be able to bring them in through an open API and really have more visibility so when we bring it in we can streamline it, train them, and really get everyone on the same page so we can have more visibility into what that profitability looks like, what people are doing, as well as repurpose those employees that maybe were working inefficiently at their old company. We find a lot of that as we go into New organizations or older organizations that we go in and acquire, we find that some of their jobs may be redundant, but they're very valued and experienced people that know a lot about our industry, a lot about their customers, and we repurpose them to really concentrate more on revenue-generating activities and profitability activities rather than minutia. So that's one of the things that's been a nice surprise for us is as we're acquiring companies, we're able to repurpose people to really be more efficient.

speaker
Eddie

Got it. And on that new customer acquisition topic, could you give us some color into the strategies you're pursuing to acquire new customers?

speaker
Andy Shape

Sure. So we're looking at a couple different ways. One is geographic. So our main headquarters is just outside of Boston in Quincy, Massachusetts. That's our main headquarters. When we acquired Wildman Imprints, we opened up an office in Warsaw, Indiana. So now we expanded our footprint into the Midwest. We are looking geographically to look west coast as well as other regions within the country as well as potentially even eventually globally and worldwide. Currently, we're executing our global programs through partnerships, but we may explore that in the future. So geographical is one area that we're looking at. In addition, we're looking at finding somewhat smaller, not too small, but in the, say, $3 million to $10 million range where there's customers who haven't taken advantage of our technology offerings, our supply chain strengths, our strength of our balance sheet that really haven't been able to capitalize on what we can really offer as comprehensive services and taking those customers that have a great client base or those competitors of ours who has a great customer base and great people and great relationships with their customers but really haven't capitalized and maximized that. So we're really looking to find those opportunities where we can go and really accelerate that even further by giving them additional resources.

speaker
Eddie

Awesome. And then as you guys continue to grow by acquisition and organically, do you think we should maybe see continued reduced costs of purchases going forward? Or are you more bound by the Facilis group at this point?

speaker
Andy Shape

No. So Facilis group is just a organization that we're part of to be part of their community, to take advantage of some of their software tools that they have, as well as some of the increased buying power for some of the supply chain that we might not necessarily spend a lot with. On the other hand, because of our spending already, we negotiate directly with most of our suppliers and our factories that are the large ones to negotiate our own buying power, our own rebate structure, as well as preferred pricing. We do believe as we continue to grow and as we continue to get larger that we'll be able to increase not only our gross profit margin but our net profit margin. We do want to make note that our goal right now is to continue to grow top line revenue as a priority. Obviously profitability is important to us, but we are looking to accelerate our growth even further at a top line revenue as a priority and then eventually continue to work on profitability over time to try to get that even relative to one another. So as our growth, as we see our growth increase by multiple double-digit figures, we want to see our profitability increase at the same pace.

speaker
Eddie

Gotcha. And do you guys have any estimate for maybe some non-recurrent operating expenses that might have occurred in a year?

speaker
Andy Shape

Off the top of my head, I don't have exact non-recurring expenses that maybe hit the P&L in 2021. I don't want to put a figure there, but it was significant. But it was significant that hit it. I mean, as we had mentioned, there's not only the direct cost, but the indirect cost of going public. as well as, you know, everything that we did in 2021, we implemented it, we acquired Wildman, we integrated that, we implemented a new ERP, began that process. We also went public and, you know, that was a lot of work where a lot of the resources that we had normally working on our day-to-day business had to be backfilled by others so that we could do the day-to-day, but also work on, you know, strengthen our balance sheet through raising capital. And You know, we're very happy with how that turned out. Now our balance sheet is extremely strong, and we're just extremely well positioned to really capitalize on this market where no one else really is. So I feel really good about the position we're in. It's extremely unique. Everyone within our industry is excited to watch what we're doing. We're excited to see what we can do, and we're very excited about the future of Strong.

speaker
Eddie

Okay, great. Thanks, Andy, and congrats again.

speaker
Andy Shape

Thanks, Eddie.

speaker
Operator

Thank you. Our next question today is coming from Evan Greenberg at Legend Capital Opportunity Fund. Your line is live. You may begin.

speaker
Evan Greenberg

Hello, guys. Congratulations on a great quarter. Thanks, Evan. You're welcome. First question has to do with shipping costs and the increase as a percentage of sales. I'm sure most of that was in line with slightly higher than the increase in in core revenues but some of that I'm sure had to do with inflationary situations how are you able to control that and you're able to pass some of that along to the customers great question as as we have mentioned in in multiple times the the cost of shipping has gone has gone way up as everyone reads and knows especially bringing in a container

speaker
Andy Shape

uh i think a container used to cost us three or four thousand dollars to bring in from china and now it's closer to say fifteen to twenty thousand dollars so we've seen a a very large spike in that uh the the nice thing about that is we are able to both the majority of the time we're able to pass it on to our customer because uh when we're going and quoting products and we're selling products to our customers we typically pass that along to them so When they ask for a project and we're continuing to do them, we are not set with our price. Our prices are able to fluctuate based on market trends, and all of our contracts are written that way. So we are able to pass that along to our customers. It is a fine line of also working with our customers to be reasonable and work with them to not push too much cost upon them, but we really are able to push that onto them since we're not like a retailer that that has a set price for a long period of time. It's more of, as projects come up, we're able to reprice them. So we're in a unique position to that. And controlling it, we're doing the best that we can to try to get preferred prices, use LTL where possible, as well as continue to work with UPS and FedEx to negotiate our prices as best as possible.

speaker
Evan Greenberg

Okay. Follow-up question to that is... You have ample cash reserves, as you've noted, and you're buying back stock and you're generating cash for the most part. I mean, you had some additional expenses this quarter. The first two-part question, the first part is, on a normalized basis, what do you think the EBITDA would have been had you not had the ERP implementation and the merger and acquisition expenses? Do you think you would have had an EBITDA of around 10%? What kind of EBITDA margin do you think you would have had?

speaker
Andy Shape

This year, I don't think 10% this year would have been a stretch with everything that we had just because we've been concentrated on replacing some of that revenue. So what we knew coming into 2021, we were losing almost 15 million in revenue of non-recurring revenue between the US Census program that only happens every 10 years and PPE products. So we knew we had to work very hard to replace that revenue. So we put a lot of time and energy into sales marketing and, and really, uh, efforts of, of trying to attract new customers and new business. That's why we saw 50% organic growth because we knew it was coming and we knew we had to do that. So we put a lot of time and energy into doing that. A lot of times, uh, it, it doesn't always pay off immediately. So it takes us a little bit while to ramp up for those, uh, you know, for the money that we're putting into the sales and marketing initiatives to pay results. But as we can see by February and March of this year, where we've already had our second and third largest bookings of any time, the only one that exceeded our February and March was when we booked the census program, which was one month. When we did that, it was almost $8 million. So these are the second and third because we're seeing results from what we're putting into the business. We're putting capital into it. to increase our sales and marketing efforts, to go acquire companies. We're seeing substantial significant bookings go up. That will turn into eventual revenue, so that will be relative to one another. So, you know, I would think on a normalized basis it may be last year, even because we had to do that, would probably be closer to, say, a 5% to 7% EBITDA. Mm-hmm. Moving forward, it is our goal to get closer to 10% or above.

speaker
Evan Greenberg

Okay. And the second question had to do with acquisitions. If you saw an acquisition that was larger than the cash hoard that you have, do you have credit lines or other access to capital right now, untapped reserves that you could go to?

speaker
Andy Shape

yes so currently we have a seven million dollar revolving line of credit with salem five bank a local bank here um that that there and it's a very good uh it's a good facility that we have because there's no unused uh line fee and and they're very flexible so we have the opportunity to to increase that in addition uh we could go back to them and look at asset-based lending uh and and leverage that even further so currently right now we have seven million that's untapped that we could easily tap into, yet if we found an acquisition opportunity that would exceed our cash, which would have to be a very large acquisition, which would, you know, in our opinion, would have to be a much larger company than even Strawn in and of itself to use that capital to buy a company like that. But we do have the ability to do that, and I think we could leverage it by looking at asset-based lending and potentially double or even more of that facility that we have based on those details.

speaker
Operator

Okay, very thanks. Thank you. Our next question today is coming from Will Hamilton at Manitowoc Hill. Your line is live. You may begin.

speaker
Will Hamilton

Good morning, and thanks for the time. Just a few questions. First, the healthcare customer that you won, I was just wondering, was that like an entirely new program for them? and it was an RFP that they put out, or did you win that away from a competitor?

speaker
Andy Shape

That was not a new program. They had been running it a little bit differently before, but they did go out to RFP, and we did take that from another current incumbent, but they were running it a little bit differently. So we did a little bit different spin on that. where before consumers used to have to go pick up some of their rewards versus where we are shipping them out to them. So we took a little bit of a different, unique approach to them, and they obviously liked it and went with us, and that program is going very well, and we're very happy with that program. And like I mentioned, unfortunately we can't disclose their name due to our contract, but, you know.

speaker
Will Hamilton

So you announced you want it in January, but is it going to be in any material amount in the first quarter, this March quarter?

speaker
Andy Shape

Absolutely, yes. Yes, that will hit. We announced it in January because that's when the revenue started to come in, and that's an annuity. So it's a three-year contract with two one-year extensions. And we're looking at expanding that into other parts of their business as well as other health care providers as well. But that will absolutely hit revenue in January. first quarter and moving forward.

speaker
Will Hamilton

Okay. And that is a sort of a loyalty rewards type program that they're running that you're marketing for them?

speaker
Andy Shape

That's exactly. Yeah, we're sending healthcare products. So if people participate in the program, which is a hypertension and a pregnancy care programs and follow their guidance, which is, you know, their ultimate goal is to create healthier people in order to reduce healthcare costs for themselves. So they give incentives and rewards for people to do that. And they've seen the metrics that it works. So we want to go and take that case study and promote it to others to show that the incentives really work to not only make the customers feel more engaged, but also to reduce costs, especially in the healthcare market.

speaker
Will Hamilton

Okay. The fourth quarter growth looks like it was around 35%. And just wondering if you could give any color as to how much of that was organic. And then within the organic, roughly, what is the contribution from new customers, new logos versus expansion of existing customer relationships?

speaker
Andy Shape

So in terms of the organic growth in Q4, I don't have the figures exactly in front of me, but... I would say at least two-thirds of that was from organic growth, and then a third of that was from, as a result of, actually, now that I think about it, almost all of that was organic because we closed the Wildman Imprints transaction, the asset purchase, at the end of Q3 in 2020. So we had already realized that in Q4 of 2020 versus 2021. So All of that was organic because we didn't get any of the GAP acquisition until Q1 of this year. So all of that was organic. In terms of the new customers, again, I don't have that, but I would think that new customers probably accounts for maybe a third of that would be my assumption on that. But I don't have those figures in front of me. Bring new logos in. We're constantly adding new logos. uh right now we're concentrating on you know we have over 30 fortune 500 customers there's a lot of potential within our accounts we want to continue to expand into those while also adding so you know our goal is to continually grow those organic or those those existing accounts and maximize the revenue by creating a flywheel and giving more value to them but also finding new logos and new customers to bring on so you know it was all organic in q4 and I would say about a third of it is new customers versus old customers.

speaker
Will Hamilton

All right, that's helpful. Last question is you just mentioned in terms of driving future growth, investments in sales. How many salespeople do you have right now? What did you add last year? What are you maybe shooting to add this year?

speaker
Andy Shape

Yeah, so last year – Yeah, last year, our total employee count last year averaged at about 64 employees. As of today, we have 89 employees. So we've seen significant growth in that. Currently, right now, we have 21 outside sales reps that are commissioned sales reps. And we have 24 inside sales reps that concentrate on continuing to grow that. So that's our current sales model. And really what we're looking to do with them is really maximize that by having the inside and the outside work together. to really identify opportunities within accounts, add value to them so that they see the value that we can deliver to them and how effectively we can market their brands to continue to expand that spend. So not only are we looking to add additional salespeople and additional marketing efforts to that, we're also looking to try to maximize the sales potential for that current team. And in addition, we're looking at marketing efforts. So what we want to do is provide more inbound lead generation for that sales team so that, you know, more eyeballs are on Strong, more people see who we are, more people are interested in what we do when we hand those leads over to our sales team to capitalize on Close. So that's really part of our strategy is, you know, not just looking at acquiring companies, but also have a very tight strategy on how we acquire new customers, how we acquire the maximum amount of business from our customers and apply that not only to ourselves, but to the acquisitions targets that we bring on. So it's not something where we're just buying companies and remaining status quo with them. We want to take that revenue, protect that asset and grow that asset that we buy by applying those best practices and resources to capitalize on what we bought for that asset.

speaker
Will Hamilton

Do you have metrics for outside sales as to what you hope a mature outside salesperson to hit in a year?

speaker
Andy Shape

We have different levels. We have junior sales reps. We have senior sales reps and enterprise account sales reps. They run the gamut between what we're expecting for each of them. But we have recently changed our commission structure to pay more on growth and less on repeat business. So, you know, we look at an annuity and say annuities are great, but annuities are great when they grow. And that's really what we're trying to promote within our sales team is give that compensation model to really promote growth within their existing accounts, not just status quo within that. This industry has had a very big tendency to... to really accept staleness within accounts. And really what we're trying to do is say, you know, offer more products, more services, more offerings to our customers to be more valuable to them so we can grow those accounts, not just be satisfied with status quo.

speaker
Will Hamilton

Thank you for the time.

speaker
Operator

Yep. Thank you. We have no further questions in queue at this time. I would now like to turn the floor back over to Andy Shape for any closing remarks.

speaker
Andy Shape

Thank you very much. We're excited about the future of STRON. We're excited about how we ended 2021. Our balance sheet is extremely strong compared to our trading, where we're trading near or even sometimes below cash value. We feel like this is a unique opportunity for investors and for ourselves to really build even further value in STRON. So we're very excited about the future of our business. We're in a unique position where we really have a industry that no one is capitalized on. There's scarcity value. There's very few public companies that are within this space, especially on a major exchange like NASDAQ or New York Stock Exchange. We're really the only one that is completely promotional product-based. There are some divisions of some other companies, but we're very excited about that. So thank you for your time. Appreciate listening and look forward to the future of Strong. Thank you.

speaker
Operator

Thank you, ladies and gentlemen. This does conclude today's event. You may disconnect at this time and have a wonderful day. We thank you for your participation.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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