Greetings, and welcome to the Stran & Company Second Quarter 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Alexandra Schilt, Vice President of Crescendo Communications. Ma'am, you may begin.

Good morning, and thank you for joining Stran & Company's 2023 Second Quarter Financial Results and Business Update Conference Call. On the call with us today are Andy Shape, Chief Executive Officer; and David Browner, Chief Financial Officer. The company issued a press release today, August 14, 2023, containing its 2023 second 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 3 months ended June 30, 2023. 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, we will now turn the call over to Andy Shape, Chief Executive Officer. Please go ahead, Andy.

Thank you, Aly, and thanks, everyone, for joining us today. Over the last several months, we have developed and executed on our business growth strategy, which has resulted in 18% growth in revenue to $17.5 million for the second quarter of 2023 and 23% growth in revenue to $33.2 million for the first 6 months of 2023. Importantly, in the second quarter, our organic revenue increased 11%, while also achieving a 35% increase in gross profit to $5.1 million and improved our gross profit margin to 29.1% from 25.4% for the same period last year. Additionally, for the first 6 months of 2023, our organic revenue increased by 14%, while our gross profit increased by 40% to $9.8 million, and gross profit margin improved to 29.4% from 25.8% for the same period last year. We're very proud of this organic growth and margin improvement, given the current market environment and declining sales many competitors in industry are experiencing due to economic uncertainty and pressure on marketing budgets. Rather than contracting though, we are growing and capturing additional market share within the $25 billion promotional products industry. We're witnessing a strong contract momentum as a result of our sales efforts and highly focused marketing initiatives. We expect this trend to continue as we further refine and expand our outreach as well as leverage established relationships from our acquisitions. Regarding our acquisitions, we are proud to say we completed 4 meaningful acquisitions within the last 18 months. G.A.P. Promotions, Trend Brand Solutions, Premier NYC and our most recent acquisition of TR Miller have all brought meaningful and important strategic advantages to Stran and our operations. Importantly, G.A.P. Promotions, Trend Brand Solutions, Premier NYC are all fully integrated into our operations, and we are working towards full integration of TR Miller. While it…

Thank you, Andy. Revenue increased 18% to approximately $17.5 million for the 3 months ended June 30, 2023, from approximately $14.8 million for the 3 months ended June 30, 2022. The increase was primarily due to a higher spend from existing customers as well as business from new customers. Additionally, the company benefited from the acquisition of the assets of G.A.P. Promotions in January 2022, the asset of Trend Promotional Marketing in August of 2022, the assets of Premier Business Services in December 2022 and the assets of TR Miller in June 2023. Gross profit increased 35% to approximately $5.1 million or 29.1% of revenue for the 3 months ended June 30, 2023, from approximately $3.8 million or 25.4% of revenue for the 3 months ended June 30, 2022. The increase in the dollar amount of gross profit was due to an increase in sales, partially offset by an increase in purchasing costs. Net loss for the 3 months ended June 30, 2023, was approximately $800,000 compared to the net loss of approximately $400,000 for the 3 months ended June 30, 2022. This change was primarily due to an increase in operating expenses and an increase in purchasing costs. These factors were partially offset by the increase in sales during the 3 months ended June 30, 2022, from the acquisition of assets of each G.A.P. Promotions, Trend Brand Solutions, Premier NYC and TR Miller and the increase of reoccurring organic sales during the 3 months ended June 30, 2023, compared to 3 months ended June 30, 2022. At June 30, 2023, the company had $25.5 million of cash and investments and no long-term debt. At this point, I'll turn the call back over to Andy.

Thank you, David. Overall, we have continued to execute on our business growth strategy, resulting in increased revenue, increased recognition within the industry, an expanded national point and a growing customer base. We are very proud of our accomplishments and look forward to reporting additional achievements as they unfold. I'd like to say thank you for joining the call today. At this point, we'd like to open up the call to questions. Operator?

[Operator Instructions] Our first question is coming from Robert Smith with RSA Investments.

Just a couple of questions. How does seasonality affect your business?

Sure. Thank you. Yes, seasonality does affect our business. So historically, the first 2 quarters have been our slowest months and this year is no different. So it does affect that. But one thing to make note of is our bookings are very strong right now. Currently, we have over $15 million in open bookings, which supports our belief that our accelerated growth will continue in the second half of the year because those bookings are already customers that have placed orders with us but will deliver in Q3 and Q4, in addition to any new business that we acquire between now and the end of the year. So seasonality really does affect it. We're very -- a lot of the business comes in at the end of the summer when people start preparing for either the holidays at the end of the year, and that's historically we've seen our largest quarters and are expecting that this year as well.

All right. The company showed some nice sales and gross profit growth, but unfortunately, not profitable this quarter. Can you just cite some specific costs and expenses that contributed to the quarter's loss?

Sure. Yes. So as you did mention, we did see 23% growth for sales and 40% for gross profit. And there's a couple of factors that are contributing to loss. The first one is probably the -- the largest one is the acquisition. So we've completed 4 acquisitions in the last 18 months with historically, those companies have done combined over $30 million in historical revenue. So it's a large portion of our business. And the costs associated with identifying them, performing the due diligence with both legal and accounting, as well as the closing costs and then integrating that into business as well as the capital to close the transaction, combined with the resources that we've had to really put those in place to make sure that we capitalize on those opportunities really is a driver of some of the costs. So a lot of the professional fees went up. Resources, we have to have additional resources to identify to make sure that we do that. And we also have to look at when we close a transaction, we have to keep in mind that those costs, the overhead, the employees, anything -- any of the cost, we immediately start to recognize those costs immediately. Yet sometimes the sales cycle and the revenue, maybe because of the longer sales cycle and lead times, takes a little bit longer to recognize that. So those things combined, we feel like our short-term losses that in the long term will pay massive dividends in the long run as I mentioned this should combine historically that created over $30 million in profitable revenue. So some of those costs -- that's the first one. The second one is making additionally long-term investments in technology that will create not only internal efficiencies but also differentiators for Stran for our customers so that it makes it easier to do business with them. But again, some of the acquisitions, these are short-term investments that make us long term because what got us to $30 million, $40 million isn't going to get us to where we want to get into hundreds of millions of revenue. So we have to build that infrastructure. So building that infrastructure takes time. Yes, we are looking at -- not only looking at adding infrastructure, but also making adjustments and reductions in staff where there's redundancy or efficiency. So we're combining those together and really looking at that. But those are really the cost drivers for the last 2 quarters. The integration and costs for the acquisition is really the big one as well as the technology improvement.

Well, that helps a lot. And just one last question. Just looking at macro trends. What are you seeing for your customers' marketing budgets? And how do you think that that's going to affect the rest of your year?

Sure. So marketing budgets, we have -- we have heard within the industry. I haven't seen any specific stats, but we have heard within the industry that a lot of our suppliers and customers had seen a slowdown in business, maybe not going backwards, but maybe not as much growth as we have seen in the past. We're seeing growth, but one of the things that we are recognizing are not as many orders but larger orders. So what we have found is our customers are really taking larger initiatives and really putting more towards those initiatives that are a little bit more targeted rather than mass blanketed. So again, with our bookings that we currently have of over $15 million worth of bookings, we're confident that these large orders will hit in Q3 -- or they are going to hit in Q3 and Q4 with additional revenue, incremental revenue that we're very confident that we'll see very strong Q3 and Q4, especially Q4 numbers because a lot of that revenue is going to hit then, and we're very optimistic about the long-term spending between holiday, holiday bookings in a strong second half of the year.

[Operator Instructions] We have a question from Mike [indiscernible] who is an investor.

Stock is trading around $1.30. Where do you and the Board stand or discuss or think about buybacks?

Sure. So we do have a buyback in place where, historically, I think we spent about $3 million on buybacks, and we have approved up to $10 million for buyback. And it's really balancing preservation of cash and using that versus buying back the stock. So one of the things that we look at is a combination of why we went public. We went public to use that money to accelerate our growth and really to go and create something special within this industry because we feel like there's such an opportunity within the promotional products industry to become a true leader. So balancing between building long-term value in the company, becoming a true industry leader versus buying back shares as well. So we look at a fine balance between them, and we will take advantage of that when we see it as we have in the past, and we have -- as I mentioned, I think we have about $6 million or $7 million left to take advantage of that if we find that to our bank and to our shareholders.

We currently have no further questions in queue at this time, so I will hand it back to management for any closing remarks they may have.

Great. Well, thank you, everybody, for joining. We're optimistic about Stran, our future and where we are today and where we're going in the future. So thank you. Please stay in touch with us and keep watching. We have a lot to happen in the next few months and excited to report on that. Thank you.

Thank you, ladies and gentlemen. This does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.