Stran & Company, Inc. Q3 FY2025 earnings call

• Company history: Started 30+ years ago as a small two-person operation, grew to a national platform serving Fortune 500 companies, built on customer service, innovation, trust. • Financial results: Q3 sales up 29% y/y to $26M, 9-month sales up 56.7% to $87.3M. YTD EBITDA improved by ~$2.8M. • Segments: Stran segment driven by deeper client relationships/new enterprise wins; SLS segment grew due to Gander acquisition, integrating well with synergies/cross-selling. • Operational efficiencies: Operating expenses up 30.3% y/y for 9 months, but as % of sales declined to 31.3% from 37.7%. • Tariffs impact: Elevated tariffs increased product costs, some passed to customers but margins compressed; buyer hesitation in loyalty/casino segments affected top-line/profitability. • Share repurchase: Bought back ~267k shares in Q3. • Acquisitions: Actively evaluate acquisitions, disciplined roll-up strategy, focus on transformative deals to accelerate growth. • Awards: Named by PPAI as one of the greatest companies to work for in 2025.

The Stran segment achieved nine-month revenue of $60.3 million, up from $52.2 million the previous year. The Stran Loyalty Solutions (SLS) segment, including the acquired Gander Group business, delivered $26.9 million in revenue compared to $3.5 million last year. The Stran segment represents the cornerstone with decades of trusted relationships, while the SLS segment has become an important contributor due to the Gander acquisition. In the third quarter, Stran segment sales were ~$17.6 million vs ~$16.7 million prior year, and SLS segment sales were ~$8.3 million vs $3.5 million prior year.

• Q4 historically strongest quarter, confident in continued growth. • Focus on translating operational foundation into sustainable earnings growth. • Priorities: Deepen/expand client relationships, increase operational efficiency, maintain financial discipline. • Aim for long-term margin improvement via operational leverage, technology investments, disciplined execution.

• Elevated tariffs led to increased product costs for direct import orders, compressing margins; not all costs passed to customers. • Uncertainty surrounding tariffs created buyer hesitation, particularly in loyalty and casino segments, impacting top-line activity and profitability.

Q: How are tariffs accounted for from an accounting perspective? Does that pass on to adding more revenue?

A: Tariffs increased, some passed to customers increasing revenue slightly, but more costs not passed on resulted in over a million dollars in direct cost impact. Also included buyer hesitation.

Q: Do you guys feel like you're still gonna be positive net income for Q4? Or how are you feeling about year-round cash flow positivity?

A: Historically Q4 is strongest for Stran segment, feel good about Q4 and sustained profitability moving forward.

Q: How should we think about potential contraction in the economy? How does the business typically perform during contractions?

A: Business has low capital expenditure, majority costs human capital/overhead; can pivot easily. Business isn't entirely discretionary; spread across verticals (casino, gaming, hospitality, etc.); strong balance sheet provides competitive edge, can look at acquisitions if economy falters.

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

A: Get inbound inquiries, attend industry events, introduced to potential targets; industry has ~25k-30k distributors, Stran is ranked 12th, well-known, so many approach for acquisition; being more scrutinizing now for bigger impact/synergy.