Good morning, ladies and gentlemen. Thank you for standing by. And welcome to the Stran & Company First Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. I would now like to turn the floor over to the host, David Waldman, Investor Relations. Please go ahead.

Good morning, everyone. And thank you for joining Stran & Company's 2022 first quarter 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, Friday, May 13, 2022 containing first quarter 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 three months ended March 31, 2022. Before we get started, we would like to remind everyone that during this conference call, we may make forward-looking statements regarding timing and financial impact of Stran'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 Stran's control. With that, I will now turn the call over to Andy Shape, Chief Executive Officer. Please go ahead, Andy.

Thank you, David. And thank you everyone else for joining today, as we discuss our significant progress made during the first quarter. First, I’d like to highlight that we achieved a record revenue of $12.3 million for the first quarter of 2022, an increase of 62.5% when compared to Q1, 2021. Even more important, excluding the G.A.P. Promotions acquisition, our organic revenue increased 50.8% over the same period last year. And we have maintained a solid balance sheet with $30 million in cash reserves and long-term debt as of March 31, 2022. Our revenue growth is a direct result of significant contract wins with leading organizations, while executing on opportunistic, yet aggressive acquisition strategies. 2022 is already proving to be a transformative year for Stran, as we are gaining traction in the market. One example is the recent multiyear contract we secured with the large national healthcare company. This selection was based on our ability to execute as well as our ability to address their complex marketing needs. The initial value of this contract is expected to be over $6 million. However, we believe we can secure additional business from this organization as well. We also look forward to highlighting them as a case study to demonstrate our capabilities in the healthcare sector. While, companies such as this, already utilize promotional products as a marketing tool to increase brand awareness. They are now realizing the power of promotional products to drive healthy consumer behaviors. As a result, our goal is to add similar customer engagements in the months ahead. We are winning these projects as a result of our compelling value proposition and comprehensive offering. We truly act as an extension of the customer of our customer by providing branded products, a flexible and customizable e-commerce platform for order processing,…

Thank you, Andy. Revenue for the three months ended March 31, 2022 was $12.3 million compared to $7.5 million for the same period in 2021. The increase was primarily due to higher spending from existing clients as well as business from new customers. Additionally, we benefited from the acquisition of the G.A.P. Promotions assets in January 2022. These increases in sales were partially offset by a lack of in-person events and business still not being fully reopened as a result of the COVID-19 pandemic. Gross profit increased 40.4% to $3.2 million, or 26.3% of sales for the three months ended March 31, 2022, compared to $2.3 million, or 30.4% of revenue for the same period last year. The increase in gross profit was due to increased sales partially offset by an increase in purchasing cost. Additionally, we had slightly lower margins due to our new healthcare client, given the sheer size of the contract, but it also provides us an important foothold to expand our presence in the healthcare market. We also had higher freight revenue, which comes with lower margins. Operating loss for the three months ended March 31, 2022 was $806,000, compared to an operating loss of $354,000 for the same period last year. This increase was due to higher general and administrative expenses, which was primarily due to an additional expenses related to the acquisition of the G.A.P. Promo assets, the implementation of our new ERP system and Oracle's NetSuite platform and ongoing public expenses in the organic growth in our business. Operating expenses as a percentage of revenue were 32.8% in the first quarter of this year, compared to 35.1% for the same period last year, a decrease of over 220 basis points as, we continue to carefully manage our expenses. Net loss for the three months ended March 31, 2022 was approximately $546,000 compared to a net loss of approximately $290,000 for the same period last year. This decrease was primarily due to the integration expenses related to the acquisition of the G.A.P. Promo assets, ongoing expenses related to being a public company and higher cost of purchases. These factors were partially offset by the increase in sales from our January 2020 G.A.P. Promo asset purchase and the increase from reoccurring organic sales. On March 31, 2022, the company had cash and cash equivalents of approximately $40 million and no long-term debt. It's worth noting that of this $40 million, $10 million was a deposit from a customer offset in the liability section of the balance sheet. But even backing out the $10 million, we had $30 million of cash reserves at the end of the quarter. Given the strength of our balance sheet, we announced a share repurchase program of up to $10 million. And as Andy previously mentioned, we expect to be in a position to utilize this in the near future. At this point, I'll turn the call back over to you Andy.

Great, thank you, Chris. To wrap up, we have a strong balance sheet and well capitalized to execute on all of our organic growth strategies while continually to actively pursue synergistic acquisitions. We are extremely well positioned to take advantage of the opportunities in front of us are excited about the outlook for 2022. I'd like to thank all of you for joining the call today. And we look forward to providing further updates as developments unfold. At this point we would like to open up the call to questions. Operator?

Certainly. The floor is now open for questions. [Operator Instructions] Your first question is coming from Edward Reilly with EF Hutton. Please post your question. Your line is live.

Hey, guys. Thanks for taking my question. I was wondering if you could speak to inflationary pressures and your ability to pass on increased costs to your customers.

Thanks, Eddie. Great question. So that is one of the benefits with our business model is. Typically, all of our contracts are written that we price out the products as we reorder them. So when we buy inventory for customers, we have $6.1 million in inventory right now. And we sell through that inventory based on the price that we bought that for. But typically, we turn inventory over our ideal situations three to four times per year. So we usually sell through that before inflation has really impacted it too much. But as prices start to increase, or we see inbound freight costs increase or any other costs, we typically go back to our customers as we reorder, and increase prices relative to what any price increases we've seen. So that does protect us from price increases, as well as identifying if we need to increase to cover our cost of living increases or just regular inflationary, as well as we do a lot of transaction orders to for our customers, as we quote them, they typically order within 30 days, and our quotes typically only are valid for 30 days. So, once they place an order, we -- and we purchased the goods that is typically usually fixed. So, it does protect us from not a retail model where we have things in the market for a long period of time and can adjust those prices. So we're very flexible with that.

Got it. I was wondering if you can kind of unpack for me a little bit more of the customer deposit the program liability for me. Is this just deferred revenue, and does it have anything to do with the healthcare customer that you guys gained?

No, this is a -- this is completely separate. This is a program we've been running a loyalty and rewards program that that we send out gift cards for this customer to consumers. But we need to use that money to fund those cards. So they give us the deposit of funds. And then we set that aside and earmark that directly for those gift cards that we're funding. Typically they fund anywhere from $20 million to $25 million historically per year, but that is continuing to grow. We don't obviously count that as revenue, we only count the service fees that we make for managing the program and processing the transactions as revenue but that just is offset. So they typically send us anywhere from $10 million to 15 million in cash that we then set aside directly for those gift cards funding. It's a gift card funding account that we use to then fund those cards. So although it shows up on the balance sheet as cash, we'd like to make note that it since it's offsetting liability directly rated that it's -- we don't want to be misleading that it's ours.

They go up and down -- they go up and down together at the same amount, to zoom out of cash account and liability, up and down at the same.

Yep, got it. Yep, makes sense. And then on operating expenses, do you happen to have the costs in the quarter that are relating to the ERP upgrade and acquisition costs, just so maybe we can paint a better picture of more normalized operating expenses?

Well, if we look at the public expenses that are related just to being public, anything between legal, IR, accounting compliance, D&O insurance, that's approximately $500,000 the first quarter. Some of that was a onetime insurance as a result of the PIPE. But that those are one of the expenses kind of going the opposite. In terms of the --

The ERP, I think add on $42,000 in consulting fees for the month of -- just for the quarter.

Yes.

For the ERP.

Yeah, for the ERP. And then there was some -- and then out of that, also, there was some stock-based compensation related to the acquisition of I think, $90,000 in stock-based, and then $28,000 in stock option, compensation.

That's right.

Okay, got you. Got you. And then just on the acquisition pipeline, could you comment on how that looks currently?

Sure. So we're actively pursuing all sorts of, of acquisition targets. One of the things we don't want to be impatient. And so we're being selective of who we really want to do a deal with. So we don't want to overpay. And we also want to make sure that there's synergistic properties. We don't want to just go out and buy revenue, we want to buy proper revenue. G.A.P. was a great example of someone where that was really a very good opportunity, because they have not capitalized on their opportunities with their large customers. And we've already had the chance to go out and meet with their customers and expand that relationship. So we're looking for more customer or more competitors who are in that space. We're actively talking to dozens of them. We don't have anything obviously, that's public knowledge, but we are actively talking to dozens of competitors. Like I said, though, we're being selective. And we don't want to rush into things just to say we're doing it. We want to make sure that we dot our Is and cross our Ts when it comes to the right partners.

Cool. And then the last one for me, just in regard to the blackout period for the share repurchase program. Is that effectively over today, are you able to utilize that to repurchase them [Multiple Speakers].

I think people -- I think next week, I think it's a few days. I'm not sure exactly what it is. But we're relying on our counsel for that. I think we have another I think maybe till Tuesday is the earliest we could execute that. But that is our plan is to go in the market for that.

All right, excellent. Thanks, guys. And congrats.

Thank you. Thanks, Eddie.

Your next question is coming from Anthony Marquese [ph]. Please pose your question. Your line is live.

Hi, I apologize. I had to come on Q&A late, but I listened to everything else? At what point will you feel comfortable giving two questions? At what point will you feel comfortable giving guidance, even yearly guidance? That's my first question.

For forecasted revenue.

Yeah. We just want to be careful, since we were fairly new being listed. We want to be careful about forward-looking statements. So we're taking that day-by-day. But, if we look at some of the announcements that we made looking at last year's revenue of just under $40 million, and then we add -- we announced we're getting $6 million and then we announced we acquired G.A.P. If you combine the three of them together, that'll give you a pretty good idea of what we're doing. But rather than us going and making those forward-looking statements we're really want to rely on our proving it rather than saying we're going to prove it. So we just want to get a little bit of underneath us before. And we're also in -- remember, we're also in very serious growth mode right now. So things can change very quickly because, we're really aggressively looking at acquisitions, we're aggressively looking at adding new staff. So things could change very quickly. And we don't want to make those statements too far in advance.

Right. Are there any public company comps that you can think of? I think you're growing very rapidly, at least in this sector, given the lack of research coverage, or at least I think as far as I can see, only one company covers you. Are there any public company comps that you can point to in terms of relative value, where you’re trading versus others?

Yeah. I would say there's a few different public comps. The first one, it's not a direct competitor, but they're very similar for Imprints, they’re on the London exchange. And I'm not sure the ticker, I think it's.

Right.

For Imprints. They do have around $700 million in revenue, or they did the historically, that's one we choose. There's another one on the London called Pebble Group. They also -- I think they're about $150 million in revenue. And then there's one, Superior Group of Companies, it's a uniform company, but they have a division called BAMKO, that directly competes with us. And that's really the closest comp, but it's only accounts for about 25% of their revenue is what we do. The other rest is a uniform, like a Cintas. Cintas actually could be considered a comp as well. But it's more uniform-driven. So those are really the three main ones that we look at are, Pebble, for Imprints and Superior Group of Companies.

Okay. And the final question I have is given what's going on in the markets, volatility, interest rates and the economic front? Are you seeing valuations for your potential acquisitions affected by this, in terms are you seeing better deals, you see more deals? I'm just trying to get a sense of whether this recent volatility in the last several months has created more, in your mind opportunity for acquisition?

Not quite yet honesty. That's why we're being a little bit patient about it is, because I don't think people have quite, especially people who may be struggling, has not started to feel it yet. As we start to see interest rates go up, finding raising capital, much harder to do as we find or to execute, as we start to find people are struggling to run their business just based on working capital. I think that'll open up more opportunistic things for us. Not because the company isn't strong, just because it's harder for them to run. So we are being opportunistic when we're looking at, I don't think enough people have recognized that yet. But we're waiting patiently for that to happen. Not that we want to be bottom feeders, but we do want to find those strong companies that really are just growing like similar to us, when we were growing, we had a hard time keeping up, we were growing so fast or hard or having a hard time keeping up with our working capital needs, and it was difficult. And, we made it work and grew even faster. But some people don't like to take that risk. So we are finding some people are starting to look right now. But we feel that in the next few months, it really will open up even further.

Okay, thank you very much.

Because -- yeah, one additional thing is the beginning of this year really was people started, opening up spending more. So I think everyone right now is the industry seen a big increase, everyone started to see a pickup. So I think everyone was very optimistic. And then, world events and the economy and everything started maybe putting a damper on that. So I think, we will see that those opportunities open up even more.

Got it. Okay. Thank you very much. Great quarter.

Thank you.

Thanks.

We have a follow-up question coming from e Ed Reilly at EF Hutton, Please pose your question. Your line is live.

Hey, guys, sorry. Just one more for me. You mentioned that you're aggressively adding new staff. I was wondering what types of positions kind of are making up the majority of that hiring.

So there's a few different things that were hired. We've hired in the past six months. We hired a Chief of Staff. We hired a new CTO, Chief Technology Officer, a new Chief Operating Officer. We also hired some new people in marketing, a social media and digital content provider, a SEO, Marketing Specialist, head of Client Services that takes up our client service that's in charge of executing on sales and new Vice President of Sales as well as additional sales people to cover accounts and help grow them. So, there's twofold that we're looking at. One is building out our infrastructure to handle our significant growth. As we continue to grow, what got us to say $40 million is going to get us in 10 times that. So we recognize that. So we need to build our infrastructure so it can handle additional sales and additional customers that we bring on. In addition to that, we're hiring new sales, marketing and business development folks that can put those resources to work and help pay for those. So we're really looking at that in two sections, but not doing them one of them or not doing one after doing them simultaneous simultaneously. So we're adding new people to generate more business and more people that can help us execute on that business on the backend. So those are some examples, some people that we've hired as well as a few additional people within our technology team.

Right. Thank you.

[Operator Instructions] Your next question is coming from Helen Litzak with Forge Capital [ph]. Please pose your question. Your line is live.

Congratulations on the strong quarter. I wanted to ask since the completion of G.A.P. Promo, are you seeing additional traction within the beverage space? And how will you get additional customers in this market?

Thank you. Yeah, the beverage space is a massive opportunity. If you think about if you go into a restaurant, a bar or a package store or anywhere where you buy alcohol, you can see merchandise all over the place. So and it's fairly bulletproof to the economy, people always seem to continue to buy alcohol even when the economy is tough. So that's a tremendous opportunity. So not only are we G.A.P. is -- not only as G.A.P. introduced us to some fantastic clients and some fantastic brands, and also some of their resources and buying experience that they have within that space has really helped us not only use that for expanding G.A.P.’s customer base, but also applying it to some restaurants’ customer base, as well as attracting new customers together. So combined, finding those new beverage opportunities are really great. And we've already -- as I may have mentioned, we've already gone out and visited some of G.A.P.’s customers and started trying to get more opportunities with them and more sales from those organizations. So that's a huge opportunity. We have a whole division that concentrates in the beverage space. We're looking to continue to expand that and build on that through expanding G.A.P.’s current business, acquiring new customers within that space with marketing tools and direct sales, as well as expanding our current beverage clients since we have an extensive list of them as well. So it's a great market and G.A.P. is just help us really expand that even further.

That's great. Yeah, I saw some of them -- their displays, they look really, really great. So thank you for that.

Thank you.

Your next question is coming from Maya [Indiscernible]. Please pose your question. Your line is live.

Thank you for taking my question. Given how you reiterate the disconnect with share price. Andy, how aggressive are you guys intending to be with the buyback? I know there's regulations, you have to follow one being the 25% of the daily volume. But I was wondering if you can enlighten us on how you aim -- how aggressive you aim to buy One Eagle [ph]. Thanks.

Sure. So there -- the 10b-18 is like -- as you mentioned, some of the restrictions restricts us to what we can do. And I think I don't know exactly what the share count is today. But we are restricted to only be able to do so much within the market. So our board of Directors did authorize up to $10 million in capital to go -- authorized to go repurchase shares. I do think that's probably a little aggressive based on market conditions. So we are looking to be fairly aggressive but not use all that's been authorized. We did offer -- put up $10 million just to be flexible based on what the share price does. But I do think that as soon as we -- the compliance window opens and we can get everything lined up and ready to go we will start executing on that very shortly. We're also looking at some insider buys, myself included to go purchase shares so that will be coming in the near future and we'll do that. So we do have an open window between now and say mid-June is when the blackout period is closed and then 15 days before the quarter-end, we have to go into blackout period as well. But, we are looking to do that. We also are recognizing that, we did raise capital, the reason why we went public and the reason why we raise money and the reason why we did the pipe was because we do want to accelerate the growth of this business. So we don't want to limit ourselves by using all of our capital to buyback our stock, we do want to also be aware that the reasons why we didn't do this, we want to become a leader and a player within this industry, a true leader. And if we use all of our capital to do that, to just to buy back shares, because it's a good price that may limit us. So we're conscious of that and want to find that nice balance.

Absolutely. And I appreciate that. Do you guys expect buying to be a daily occurrence until blackout period starts again? Or how -- can you like enlighten us to your guys' plan of action with it?

We're not too sure yet. We want to see how -- we have not executed it that yet. So we want to see how it goes. And then we'll play it day-by-day or week by week of how we're going to execute on that depending on the volume. But yeah, we are planning on making those decisions almost on a daily basis.

Thank you. Congrats on a great quarter.

Thanks Maya.

There appear to be no further questions in queue at this time. I would now like to turn the floor back over to management for any closing remarks.

Thank you, everybody, for joining. We are proud to have our first quarter and 2022 behind us with such revenue growth. We're working hard to create shareholder value. I hope everyone recognizes that we're really making a push to grow this company into something special within our industry. Thank you for support. Thank you for everyone who's met with us over the past few months. Learning about more about Stran, listening to our story and believing in us. We believe in ourselves. We're really looking forward to the future of this company, and the promotional products industry. And thank you everyone and look forward to providing more insight in the future. So thank you for your time today.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time. And have a wonderful day. Thank you for your participation.