Annual report [Section 13 and 15(d), not S-K Item 405]

Segments

v3.25.1
Segments
 12 Months Ended
Dec. 31, 2024
Segments [Abstract]  
SEGMENTS
R. SEGMENTS:

 

In its operation of the business, management, including our chief operating decision maker, who is also our CEO, reviews certain financial information, including segment information prepared on a basis that is consistent with GAAP. There is no expense or asset information that is supplemental to information disclosed within the consolidated financial statements, that is regularly provided to the CODM to monitor and evaluate segment performance.

 

During the periods presented, we reported our financial performance based on the following reportable segments: Stran & Company, Inc. (“Stran”) and Stran Loyalty Solutions, LLC (“SLS”).

 

Our reportable segments are described below.

 

The Stran segment’s business is focused on being an outsourced marketing solutions and promotional products provider for a variety of customers and industries, working closely with customers to develop sophisticated marketing programs that leverage Stran’s promotional products and loyalty incentive expertise. Stran purchases products and branding through various third-party manufacturers and decorators and resells the finished goods to customers. The segment earns the majority of its revenue from the sale of unique, quality promotional products for a wide variety of industries primarily to support marketing efforts.

 

The SLS segment’s business is focused on the casino, gaming, and entertainment industries as an extension of the Company’s newly formed Casino Continuity and Loyalty group. The group specializes in creating high-quality, branded merchandise for casinos, sourced through various third-party manufacturers, focusing on promotional products that enhance customer loyalty and engagement. It partners with nationally recognized brands to create high-quality, custom products that resonate with casino patrons, helping casinos drive redemption rates and ROI through tailored merchandise and marketing solutions to build recurring revenues for SLS customers and the segment itself.

 

The accounting policies of our reportable segments are the same as those described in the “Organization and Summary of Significant Accounting Policies” in the notes to the consolidated financial statements for the Company.

 

For each of the two segments, the CODM uses segment gross margin and segment operating profits or losses in the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for revenue as well as profit measures when making decisions about allocating capital and personnel to the segments. The CODM uses segment gross margin and segment operating income in determining the compensation of certain employees, primarily for its recently acquired Gander business, which is consolidated as part of the SLS subsidiary and also comprises the segment SLS.

As of December 31, 2024, Stran and SLS had total assets of $45,206 and $9,944, respectively. As of December 31, 2023, Stran and SLS had total assets of $49,036 and $0, respectively. The entire goodwill balance of $2,321 as of December 31, 2024 was allocated to the SLS segment. No goodwill was recorded as of December 31, 2023 for either segment.

 

Revenue and costs are directly attributed to our segments, and the revenues recognized as well as the costs incurred in generating those revenues within each segment are distinguishable based on the information systems in which each segment’s financial information gets recorded. There are no intersegment revenues or other transactions between the two segments that are eliminated in consolidation by the Company for external reporting.

 

The table below presents information about reported segments for the year ended December 31, 2024 and 2023

 

    December 31, 2024     December 31, 2023  
    Stran     SLS     Total     Stran     SLS     Total  
Sales   $ 72,712     $ 9,942     $ 82,654     $ 76,000     $
—
     $ 76,000  
Gross profit     23,742       2,071       25,813       24,852      
—
       24,852  
Operating loss   $ (3,844 )   $ (1,050 )   $ (4,894 )   $ (1,268 )   $
—
     $ (1,268 )

 

The segment SLS was not a part of the Company until the segment was acquired and all of its business operations were incorporated within the Company’s newly created subsidiary in August 2024. The Stran segment’s operations have remained consistent for all periods presented, however, the Company only had one operating and reportable segment prior to the acquisition. Significant segment expenses for the Stran segment during the year ended December 31, 2023 are consistent with those presented on the consolidated statements of operations.

 

A reconciliation of total segment revenues to total consolidated revenues and of total segment gross margin and segment operating income (loss) which aggregates to total consolidated income (loss) from operations, for the year ended December 31, 2024, is as follows:

 

    For the Year ended December 31, 2024  
    Stran     SLS     Total  
Sales from external customers   $ 72,712     $ 9,942     $ 82,654  
                         
Less:                        
Cost of sales     48,970       7,871       56,841  
Segment gross margin     23,742       2,071       25,813  
                         
Less(1):                        
Segment selling expenses (2)     4,987       724       5,711  
Other segment expenses (3)     22,599       2,397       24,996  
Segment operating loss     (3,844 )     (1,050 )     (4,894 )

 

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.
   
(2) Selling expenses primarily include commissions, bonuses, travel expenses, and other marketing expenses that are directly attributed to generating revenues
   
(3) Other segment expenses for each reportable segment includes:
   
● Stran – general and administrative expense, depreciation and amortization expense, and all other operating expenses not allocated to corporate overhead
     
● SLS – general and administrative expense, depreciation and amortization expense, and all other operating expenses incurred at the SLS subsidiary subsequent to the acquisition in August 2024