Stran & Co achieves 29% sales increase in Q3, emphasizing margin expansion and disciplined growth strategies for future profitability.

Andy - (00:00:00)

Impacting both top line activity and profitability for the quarter. Despite these temporary headwinds earlier this year, demand remains strong and our client base continues to show confidence in our capabilities. We also continued our share repurchase program during the third quarter, buying back approximately 267,000 shares of common stock at prices between $1.45 and $1.81 per share, totaling about $408,000 with no debt, $0.18 million in cash and investments, we remain well balanced to fund growth initiatives, pursue acquisitions and continue opportunistic buybacks. TRON continues to actively evaluate acquisition opportunities as Strategic M&A remains a key pillar of our growth plan. We're executing a disciplined roll up strategy in a fragmented industry, identifying smaller distributors that complement our business and integrating them efficiently into our shared infrastructure. This model provides low risk, high synergy growth and gives us powerful margin expansion potential through economies of scale. Our focus is now also on transformative acquisitions, the kind that can meaningfully move the needle and accelerate our long term growth trajectory. Finally, we are proud of our progress have been recognized externally. This past quarter, Stran & Co was named the Promotional Products PPAI as one of the greatest companies to work for in 2025. It's an acknowledgement of our environment we built one that empowers employees, fosters collaboration and drives creativity across every aspect of our business. Our people are the foundation of our success and this distinction is a direct reflection of their talent, dedication and shared commitment to Stran & Co's mission. After several years investing in our growth, technology and infrastructure, we are now entering a new phase, one focused on driving consistent profitability and margin expansion. With our systems, talent and scale in place, we're well positioned to translate our operational foundation into sustainable earnings growth. Overall, I'm very encouraged with how we're executing against our strategy balancing growth, profitability and shareholder value creation. With that, I'll turn the call over to David Browner, our CFO to review the financial results in greater detail. David, please go ahead.

David Browner - Chief Financial Officer - (00:02:07)

Thank you Andy and good morning everyone. I'm pleased to provide a detailed overview of our financial performance for the three and nine months ended September 30, 2020. For the financial results of the three months ended September 30, 2025, sales increased 29% to approximately 26 million for the three months ended September 30, 2020 5. From approximately 20.1 million for the three months ended Sept. 30, 2024, sales by our STRAWN segment increased approximately 17.6 million for the three months ended Sept 30, 2025 from approximately 16.7 million for the three months ended September 30, 2024. Sales by our SLS Segment, which consists of former Gander Group business, increased approximately 8.3 million for the three months ended September 30, 2025 from 3.5 million for the three months ended September 30, 2024. For the strong segment, the increase in sales was primarily driven by due to higher spending from existing clients as well as business from new customers. The SLS Segment the increase in sales was due to the acquisition of the Gander Group assets in August of 2024. Gross profit increased 18.8% to approximately 7.1 million or 27.2% of sales for the three months ended September 30, 2025. From approximately 6 million or 29.5% of sales for the three months Ended September 30, 2024. Gross profit margin decreased to 27.2% for the three months Ended September 30th, 2025 from 29.5 for the three months Ended September 30, 2024, primarily due to the acquisition of the Gander Group business in August of 2024, which operates at a lower gross margin than the Stran & Co segment. Operating expenses increased 8.8% to approximately 8.9 million for the three months ended September 30, 2025 from approximately 8.1 million for the three months ended September 13, 2024. As a percentage of sales, operating expenses decreased to 34.1% for the three months ended September 30th, 2025 from 40.4 for the three months ended September 30, 2024. Net loss for the three months ended September 30, 2025 was approximately 1.2 million, compared to a net loss of approximately 2 million for the three months ended September 30, 2024. The financial results for nine months ended September 30th, 2025, Sales increased 56.7% to approximately 87.3 million for the nine months ended September 30th, 2020 from approximately 55.7 million for the nine months ended September 30, 2024, 2024, Sales by our Stran & Co segment increased to approximately 60.3 million for the nine months Ended September 30th, 2025 from approximately 52.2 million for the nine months ended September 30th, 2024. Sales by our SLS Segment, which consists of the former Gander Group business increased to a approximately 26.9 million for the nine months ended September 30, 2025 from 3.5 million for the nine months ended September 30, 2024. For the Stran & Co segment, the increase in sales was primarily due to higher spending from existing clients as well as business from new customers. For the SLS Segment, the increase in sales was due to the acquisition of the Gander Group assets in August of 2024. Gross profit increased 49.3% to approximately 25.4 million, or 29.1% of sales for the nine months ended September 30, 2025 from approximately 17 million or 30.6% of sales for the nine months Ended September 30, 2024. Gross profit margin decreased to 29.1 for the nine months Ended September 30th, 2025 from 30.6 for the nine months Ended September 30, 2024, which was primarily due to the acquisition of the Gander Group business in August of 2024, which operates at a lower gross margin than the Straw segment. Operating expenses increased 30.3% to $27.3 million for the nine months ended September 30, 2025 from approximately 21 million for the nine months ended September 30, 2024. As a percentage of sales, operating expenses decreased to 31.3% for the nine months ended September 30th, 2025 from 37.7 for the nine months ended September 30, 2024. Net loss for the nine months ended September 30, 2025 was approximately 1 million compared to a net loss of approximately 3.66 million for the nine months ended September 30th, 2024. As of September 30th, 2025, we had approximately 11.8 million in cash, cash equivalents and investments. I'll now turn the call back to Andy for closing remarks.

Andy - (00:07:25)

Thank you, David. As we close out the third quarter, I'd like to take a moment to reflect on where we stand. Over the past year, we've made steady progress across every part of the business. Improving execution, strengthening operations and positioning Stran & Co for consistent, sustainable performance. Our focus has remained the same, serving our clients well, managing growth responsibly and ensuring that every initiative we take on creates measurable value. Looking forward, believe Strawn is entering its next phase of maturity, scaling our operations while delivering steady profitability. We see clear paths to long term margin improvement driven by continued operational leverage, technology investments and disciplined execution. We built a strong foundation designed not just for growth but for lasting value creation. Looking ahead, our priorities are clear. 1 Deepen and expand client relationships. We're working to drive measurable results for our clients and build long term partnerships rooted in transparency, Service and reliability. 2 Increase operational efficiency. We'll continue to simplify processes, invest in automation and apply data to improve margins and execution speed and three maintain financial discipline. We aim to keep a balanced approach, investing where it strengthens our business while preserving a solid balance sheet and allocating capital where appropriate. We thank you for joining us today and for your continued support of Stroud. With that, I will open the call.

Operator - Moderator - (00:08:47)

To questions Operator: Certainly the floor is now open for questions. If you have any questions or comments, please press Star one on your phone at this time. We ask that while posing your question. You please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold for a few moments while we poll for questions here. Our first question is coming from Greg Womack. Please pose your question. Your line is live.

Greg Womack - (00:09:17)

Hi, first question, how are tariffs counted from an accounting perspective? Does that pass on to adding more revenue? Yeah. Hi Greg, thank you for your question. Yeah, tariffs in terms of the increases. So when the tariffs happened, it was unprecedented as we all knew. And it did affect us for some of our orders that were in production, that were essentially at our factories that are on the water in production. And when we were charged those tariffs, we had the opportunity to approach some of our customers and ask them if they could pay more. Some of them were agreeable to it, some were not. And as a result, you know, if we were able to pass on the tariffs, it increased revenue slightly, but more importantly our cost increase at a greater pace than we were able to charge more. So you know, an analysis that we've done, you know, showing direct impact is a seven figure amount, just over a million dollars for direct costs that we weren't able to pass on to our customers. It also doesn't include some of the buyer hesitation that I mentioned in the call in April and May that now we're seeing in Q3 that buyers were uncertain. Typically when there's tariffs involved we have time to go increase prices because it's over time. But when we're in the middle of production of merchandise and with time based events that we need to give them out, we didn't really have a choice. So it was a very short window and hopefully that answers your question. Yeah, so I've got One other question too, I guess. Do you guys feel like you're still going to be positive net income for Q4 or how are you feeling about year round cash flow positivity? Are you feeling confident about that? Yeah, I mean, historically Q4 has always been our strongest quarter for the strong segment, strong promotional segment just because of end of year holidays. So we're also very excited about Q4 as it's always been heavy sales. So yeah, I mean we're obviously we don't give guidance, but we feel good about where we stand. Again, like I'd said in the earnings script, we're concentrating on continued growth while keeping an eye on managing expenses. So yeah, that's our plan. Our plan is to have sustained profitability moving Forward, which includes Q4. I appreciate it. Yep.

Operator - Moderator - (00:11:49)

Once again, if you do have remaining questions or comments, please press Star 1 at this time. Please hold one moment while we pull for any additional questions. We have a question coming from Vlad Kat with Freedom Call llc. Please post your question. Your line is live.

Vlad Kat - (00:12:11)

Thank you guys. Congrats on a great quarter. Looking forward to Q4 results in few months. How should we think about potential contraction in the economy? How does the business typically perform during contractions?

Andy - (00:12:28)

Yeah, great question. So first, yeah, we're satisfied as a business with the growth that we've seen. We do want to increase our profitability. We know that. So we want investors to know that although we accomplished a lot in the third quarter, we need to be more profitable. We know that and we're making efforts to do that and we plan every intention on doing that moving forward. So I appreciate the positivity and we like that. But we have some work to do and we know it and we will. In terms of your question surrounding the macroeconomic trend, so one thing with our business is there's not a lot of capital expenditure. The majority of our costs are human capital and overhead. And you know, if our business shrinks or if the economy shrinks, first and foremost we can pivot fairly easily to that. And secondarily, a lot of the business that we have isn't necessarily discretionary. It may seem like it is, but it isn't. A lot of the programs that we have or customers that have have this integrated in their marketing initiatives. Whether it's for new employees, whether it's for new customer acquisition, whether it's creating loyalty as well as we're spread around multiple verticals, whether it's the casino and gaming. If the economy goes down, that goes well. Beverage and alcohol spend goes up as well. So we try to intentionally be diversified in our client base so that, you know, we can address any macroeconomic trends. And then finally, we think that the strength of our balance sheet provides us also with a competitive edge over our competition. If the economy does falter, it gives us opportunity to look at additional potential for acquisitions as well as compete against people who may not be able to have the resources and capabilities that we do. So we're, although obviously we're conscious and aware of the potential recession in the economy, it doesn't scare us because we've been in business for 30 years and we've seen it go up and down and we know how to react to it pretty well.

Vlad Kat - (00:14:37)

Clear. Thank you for that insight. One follow up question, if I may.

Andy - (00:14:41)

Yeah, sure.

Vlad Kat - (00:14:43)

What is the methodology that you use to find acquisition targets?

Andy - (00:14:49)

Sure. So the industry, as some of you may know, is about 25 to 30,000 distributors within our industry Stran & Co is ranked number 12. So we're already a leader and we're well known within the industry as being one of the only few public companies out there, the only one that's core, the only publicly traded company on a major exchange in the US that that's the core business that we do and that's all that we concentrate on. So we're well known within the industry. So we get a lot of first, we get a lot of inbound inquiries, I would say dozens a month, if not more. Secondarily, I attend quite a bit of industry events as somewhat of an expert in adding value to your business, how to do that, as well as how to establish exit plans. And as a result, I'm introduced to quite a bit of people who want advice and then say, would you be interested in acquiring our company? So there's a lot of people now within our industry that don't necessarily necessarily have a succession plan for their business. And that's where we come in and help them plan for that. With Stran & Co as their exit and their succession, that makes financial sense both for us and for them to make a win win going forward. So, you know, we really look at that, but we're being a little bit more scrutinizing of our acquisitions moving forward than we have in the past potentially because we just wanted to make a little bit bigger of a difference and also we want to put those resources to work as soon as possible.

Vlad Kat - (00:16:21)

Clear. Thank you. I appreciate your focus on creating shareholder value. Happy holidays.

Andy - (00:16:27)

Thank you. Likewise.

Operator - Moderator - (00:16:31)

Thank you. There are no additional questions in queue at this time. I would now like to turn the floor back over to Andy Shape for closing remarks.

Andy - (00:16:39)

Great. Thank you everyone for joining and your continued support, support of Stran. As mentioned, I think we're entering a new phase of Stran where we've built scale. I continue to say to everyone that I speak to investors and anyone else interested in the business that if you go back and you read our initial S1 when we filed to go public, we've delivered on what we said, which is to continue to create scale through growth, invest in our infrastructure and really create a leader in the industry. And we've done that since. We've gone from about 35 million in revenue to almost 120 million in trailing twelve months revenue. So we're excited about what we've done. We recognize that now that we've hit that scale, we can start turning some dials to really drive that profitability and create even greater shareholder value. And in all honesty, as the second largest shareholder, the value means just as much, if not more to me than anybody else in the world. So I have very specific motivations to see the company really progress and do very well and I'm determined to do it. So thank you everyone who believes in Stran & Co and is committed to us and we look forward to finishing up the year strong and reporting our results in the beginning of next year. Thank you everyone and happy holidays.

Operator - Moderator - (00:17:49)

Thank you. 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.