Stran & Company, Inc.

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.

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.

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.