Stran & Company Reports $2M Net Loss in Q3 2024 Despite 2.4% Sales Increase

Stran & Company, Inc. reported a net loss of approximately $2.0 million for the third quarter of 2024, a significant decline from a net income of $1.3 million in the same period of the previous year. The company's total sales for the quarter increased by 2.4% to $20.1 million, compared to $19.7 million in Q3 2023. For the nine months ended September 30, 2024, total sales reached $55.7 million, reflecting a 4.9% increase from $53.1 million in the prior year. The increase in sales was attributed to higher spending from existing clients and new customer acquisitions, bolstered by the recent acquisition of Gander Group assets.

The company's cost of sales for the third quarter rose to $14.2 million, up 6.9% from $13.3 million in Q3 2023, leading to a gross profit of $6.0 million, down from $6.4 million a year earlier. The gross profit margin decreased to 29.5% from 32.5%, primarily due to increased product costs from vendors. Operating expenses surged by 41.9% to $8.1 million, driven by costs associated with the implementation of a new enterprise resource planning system and legal expenses related to a re-audit of historical financial statements.

Stran & Company also reported significant operational changes, including the acquisition of Gander Group in August 2024, which is expected to enhance its market position and product offerings. The company’s total assets as of September 30, 2024, were approximately $48.8 million, with total stockholders' equity at $32.3 million. The acquisition is anticipated to contribute positively to future revenue streams, particularly in the Stran Loyalty Solutions segment, which specializes in branded merchandise for casinos.

In terms of operational metrics, Stran & Company had approximately 2,000 active customers, with fewer than 350 classified as program clients, who account for the majority of revenue. The company’s cash and cash equivalents increased to $10.0 million, up from $8.1 million at the end of the previous fiscal year, indicating improved liquidity. However, the company also noted a material weakness in its internal controls over financial reporting, which it is addressing to enhance compliance and operational efficiency.

Looking ahead, Stran & Company aims to leverage its recent acquisitions and improve its operational efficiencies to drive growth. The company anticipates that its current cash levels will be sufficient to meet operational needs for the next 12 months, although it may seek additional financing for future expansions or acquisitions. The management remains focused on enhancing customer relationships and expanding its market share in the promotional products industry.