Company Overview - Advantage Solutions ranks as the 12 largest agency in the United States and No. 18 worldwide according to the Ad Age Agency Report 2025, with a revenue of $1.2 billion in 2024 [1] - The company is recognized for its omnichannel retail solutions, uniquely positioned at the intersection of consumer-packaged goods (CPG) brands and retailers [6] Industry Trends - The Ad Age Agency Report identifies three major trends in 2025: AI reshaping creativity, evolving client expectations, and agencies being asked to do more with greater precision and agility [3] Client Engagement and Services - Advantage Solutions emphasizes its ability to unify sales and marketing, delivering an award-winning shopper experience and redefining possibilities across omnicommerce [4] - The company continues to strengthen its relationship with Amazon, receiving the inaugural Gold Tier award for excellence in on-time, accurate delivery [5] Strategic Positioning - Advantage Solutions leverages data and technology-powered services to help brands and retailers generate demand and connect with consumers across various shopping platforms [6]

Core Insights - Advantage Solutions Inc. ranks as the 9th largest agency in North America and 18th globally, with a revenue of $1.2 billion in 2024, making it one of only two Midwest-based agencies in the top 25 list [1] - The company is recognized for its innovative approach in shaping shopping experiences and delivering high-tech, high-touch solutions to clients [2] - The Ad Age Agency Report highlights three major trends for 2025: AI reshaping creativity, evolving client expectations, and the demand for greater precision and agility from agencies [3] Company Overview - Advantage Solutions is positioned at the intersection of consumer-packaged goods (CPG) brands and retailers, providing a full suite of omnichannel services including branding, retail media, creative services, and e-commerce solutions [5][6] - The company has established a strong relationship with Amazon, receiving the inaugural Gold Tier award for excellence in delivery [5] - Advantage leverages data and technology to optimize consumer experiences both in-store and online, enhancing e-commerce capabilities and driving demand for brands [6]

Summary of Key Points Core Viewpoint - Advantage Solutions (NASDAQ: ADV) is experiencing significant stock price pressure, with the stock recently hitting an all-time low of $1.09, reminiscent of its previous struggles in 2023 when it dipped to $1.15 in April [1]. Company Performance - The stock price of Advantage Solutions has shown volatility, testing the $1 mark again after previously reaching a low of $1.15 in April 2023 [1]. - The current all-time low of $1.09 indicates ongoing challenges for the company in maintaining investor confidence and market stability [1]. Historical Context - The company has a history of stock price fluctuations, with the recent decline reflecting a pattern observed over the past two years [1]. - The reference to the stock nearing $1 again suggests a potential trend that investors may need to monitor closely [1].

Core Points - Advantage Solutions Inc. is providing financial assistance and mobilizing employee volunteers to support recovery efforts after recent tornadoes in St. Louis [1][2] - The company is donating $25,000 to the Urban League of Metropolitan St. Louis for emergency relief efforts [2] - Advantage Solutions is committed to supporting its employees affected by the disaster through grants and access to an Employee Assistance Program [3] Company Initiatives - The support for the Urban League is part of a multi-year partnership that includes the Save Our Sisters Fund, which offers various services to empower women [4] - Advantage Solutions positions itself as a leading omnichannel retail solutions agency in North America, leveraging data and technology to assist brands and retailers [5] Urban League Overview - The Urban League of Metropolitan St. Louis aims to empower African Americans and others in the region, focusing on economic self-reliance and social equality [6]

Financial Performance - Revenues decreased by $39.6 million, or 4.6%, to $821.8 million for the three months ended March 31, 2025 compared to the same period in 2024[95] - Operating loss from continuing operations decreased by $15.3 million to $14.6 million[95] - Net loss from continuing operations increased by $6.0 million to $56.1 million[95] - Adjusted Net Income decreased by $25.3 million, or 274.5%, to $16.1 million[95] - Adjusted EBITDA from Continuing Operations decreased by $12.5 million or 17.6%, to $58.2 million[95] - Total revenues decreased by $39.6 million, or 4.6%, to $821.8 million for the three months ended March 31, 2025, compared to $861.4 million for the same period in 2024[119] - Net loss from continuing operations for Q1 2025 was $(56,130) thousand, compared to $(50,133) thousand in Q1 2024, indicating a worsening financial performance[144] - Adjusted EBITDA from Continuing Operations for Q1 2025 was $58,181 thousand, down from $70,639 thousand in Q1 2024, showing a decline of approximately 17.6%[144] - The Branded Services segment reported an Adjusted EBITDA of $27,945 thousand in Q1 2025, down from $34,334 thousand in Q1 2024, a decrease of about 18.5%[146] - The Experiential Services segment's Adjusted EBITDA decreased to $12,069 thousand in Q1 2025 from $16,692 thousand in Q1 2024, representing a decline of approximately 27.6%[146] - The Retailer Services segment achieved an Adjusted EBITDA of $18,167 thousand in Q1 2025, slightly down from $19,613 thousand in Q1 2024, a decrease of about 7.4%[146] Segment Performance - Branded Services segment generated approximately 35.3% of revenues in Q1 2025, down from 38.2% in Q1 2024[90] - Experiential Services segment generated approximately 38.2% of revenues in Q1 2025, up from 35.7% in Q1 2024[91] - Retailer Services segment generated approximately 26.5% of revenues in Q1 2025, slightly up from 26.1% in Q1 2024[92] - The Branded Services segment revenues decreased by $39.2 million, or 11.9%, primarily due to a weaker economic environment and an intentional client resignation[120] - The Experiential Services segment revenues increased by $6.7 million, or 2.2%, driven by an increase in events per day volume[121] - The Retailer Services segment revenues decreased by $7.1 million, or 3.1%, primarily due to staffing challenges[122] Cost Management and Restructuring - Selling, general, and administrative expenses decreased to 7.9% of revenues, down from 10.3% in the prior year, due to a $22.8 million reduction in internal reorganization costs[124] - The company announced a restructuring plan in July 2024 to improve cost structure and operational efficiency, with substantial completion expected by the end of fiscal year 2024[113] - Restructuring expenses for Q1 2025 amounted to $931 thousand, compared to no such expenses in Q1 2024, indicating increased costs related to operational adjustments[144] Cash Flow and Liquidity - Net cash used in operating activities for Q1 2025 was $39.6 million, compared to $9.4 million in Q1 2024, reflecting a significant increase in accounts receivable[150] - Net cash used in investing activities in Q1 2025 was $18.4 million, primarily due to the purchase of property and equipment related to the enterprise resource planning initiative[152] - Net cash used in financing activities for Q1 2025 was $22.1 million, primarily related to repurchases of Notes totaling $18.2 million[153] - The company’s cash flow from operating activities was negatively impacted by an increase in accounts receivable in Q1 2025 compared to a decrease in Q1 2024[151] - The company’s principal sources of liquidity include cash receipts for services performed and borrowings under the Revolving Credit Facility[149] - As of March 31, 2025, the company held $67.5 million in cash and cash equivalents outside the United States, an increase from $65.0 million as of December 31, 2024[180] Debt and Interest Management - The Revolving Credit Facility has an aggregate principal amount of up to $500 million, with $451 million available as of March 31, 2025[156] - The Term Loan Facility has an aggregate principal amount of $1.1 billion, with borrowings amortizing at 1% per annum of the original issued amount[163] - The company recognized a gain of $1.8 million on the repurchase of Notes during Q1 2025, classified under interest expense[171] - The company may refinance existing debt or enter into additional interest rate cap agreements to manage interest rate risk in the future[197] - The company has interest rate collar contracts with an aggregate notional value of $700.0 million as of March 31, 2025, to manage interest rate exposure[195] - The company has entered into interest rate collar agreements to manage exposure to potential interest rate increases, with a net liability of $0.8 million as of March 31, 2025[195] Legal and Compliance - Litigation expenses increased to $523 thousand in Q1 2025 from $284 thousand in Q1 2024, indicating rising legal costs[137] - The company recorded a deferred tax liability of approximately $0.6 million for unremitted earnings in Canada, indicating a need for tax planning regarding foreign earnings[181] - The company is evaluating the impact of new accounting standards on its consolidated financial statements, including ASU 2023-09 and ASU 2024-03[186][188] - The company has no off-balance sheet financing arrangements or liabilities, ensuring transparency in its financial position[182] - The company has no majority-owned subsidiaries excluded from consolidated financial statements, ensuring comprehensive financial reporting[182] Other Financial Metrics - Interest expense decreased by $1.4 million, or 3.9%, to $34.4 million for the three months ended March 31, 2025, primarily due to a lower debt balance[130] - Equity-based compensation of Karman Topco L.P. was $(1,524) thousand in Q1 2025, a significant change from $390 thousand in Q1 2024, reflecting a shift in compensation strategy[137] - The company reported a fair value adjustment related to contingent consideration of $0 in Q1 2025, down from $778 thousand in Q1 2024, suggesting changes in acquisition-related liabilities[144] - A 10% unfavorable change in foreign exchange rates could have decreased the company's consolidated loss before taxes by approximately $0.8 million for the three months ended March 31, 2025[192] - The company expects existing domestic cash and cash flows to be sufficient to fund operations and cash commitments for at least the next 12 months[181]

Company Performance - Advantage Solutions Inc. reported a quarterly loss of $0.12 per share, missing the Zacks Consensus Estimate of $0.06, and showing an improvement from a loss of $0.16 per share a year ago, resulting in an earnings surprise of -300% [1] - The company posted revenues of $821.79 million for the quarter ended March 2025, which was 3.96% below the Zacks Consensus Estimate and a decrease from year-ago revenues of $879 million [2] - Over the last four quarters, Advantage Solutions has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2] Stock Performance - Advantage Solutions shares have declined approximately 49.7% since the beginning of the year, contrasting with the S&P 500's decline of -3.8% [3] - The current Zacks Rank for Advantage Solutions is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.10 on revenues of $886.99 million, and for the current fiscal year, it is $0.42 on revenues of $3.61 billion [7] - The estimate revisions trend for Advantage Solutions is mixed, and future changes in estimates will be closely monitored following the recent earnings report [6][7] Industry Context - The Consumer Products - Discretionary industry, to which Advantage Solutions belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Data and Key Metrics Changes - The company's first quarter revenues were $696 million, down 5% year-over-year, and adjusted EBITDA was $58 million, down 18% year-over-year [4][5] - The decline in adjusted EBITDA was primarily due to intentional client exits and transformation-related investments [5][6] - The company is lowering its revenue and adjusted EBITDA outlook to flat to down low single digits for the year [16] Business Line Data and Key Metrics Changes - In Branded Services, revenues were $257 million and adjusted EBITDA was $28 million, down 9% year-over-year [18] - In Experiential Services, revenues were $221 million and adjusted EBITDA was $12 million, down 12% year-over-year [19] - In Retailer Services, revenues were $218 million and adjusted EBITDA was $18 million, down 3% and 7% year-over-year, respectively [19] Market Data and Key Metrics Changes - Consumer confidence has waned, leading to lower than expected consumer purchases and a reevaluation of spending levels by clients [5][6] - Retailers have been destocking inventory, impacting order volumes across many consumer packaged goods (CPG) categories [5][50] - The company noted a shift towards private label products, particularly among larger retailers [50] Company Strategy and Development Direction - The company is focused on modernizing its tech infrastructure and enhancing analytics capabilities to drive efficiency [12][13] - A task force has been mobilized to improve labor utilization and address staffing challenges [14] - The company aims to be a cost-leading solutions partner to CPGs and retailers despite a softer growth environment [15] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future, citing a track record of performing well through recessionary environments [8] - The first quarter was impacted by a challenging labor market, but improvements in staffing and execution rates are expected in Q2 [9][10] - The company is confident in its long-term earnings power and cash generation potential despite near-term challenges [16] Other Important Information - The company ended the quarter with $121 million in cash and a net leverage ratio of approximately 4.4x adjusted EBITDA [20][22] - The ERP implementation is expected to yield greater cash flow benefits as the year progresses [25] Q&A Session Summary Question: Any notable changes in the macro environment compared to Q1? - Management noted improvements in hiring rates and a smoothing out of labor challenges in Q2 [32][34] Question: Have labor costs increased due to staffing issues? - Management indicated that labor cost inflation is in line with the macro market, and staffing issues were more related to talent acquisition strategies [39][40] Question: What was the nature of the debt repurchase in the quarter? - The company repurchased bonds during the quarter and is focused on balancing cash for debt reduction and share repurchases [42][44] Question: What is the impact of destocking on orders? - Destocking improved as the quarter progressed, but management has not yet seen April data to confirm if it has completely stopped [69][70] Question: What is the breakdown of consumer products versus food companies? - Approximately 70% of the company's portfolio is in food, with strong presence in personal care and household goods [73]

Financial Data and Key Metrics Changes - The company's first quarter revenues were $696 million, down 5% year-over-year, and adjusted EBITDA was $58 million, down 18% year-over-year [5][18] - The decline in adjusted EBITDA was primarily due to intentional client exits and transformation-related investments [6][18] Business Line Data and Key Metrics Changes - In Branded Services, revenues were $257 million and adjusted EBITDA was $28 million, down 9% year-over-year [20] - In Experiential Services, revenues were $221 million and adjusted EBITDA was $12 million, down 12% year-over-year [21] - In Retailer Services, revenues were $218 million and adjusted EBITDA was $18 million, down 3% and 7% year-over-year, respectively [21] Market Data and Key Metrics Changes - Consumer confidence declined, leading to lower than expected consumer purchases and a reevaluation of spending levels by clients [6][18] - Retailers experienced destocking trends, impacting overall order volumes [56] Company Strategy and Development Direction - The company is focused on modernizing its tech infrastructure and enhancing analytics capabilities to drive efficiency [13][14] - A task force has been mobilized to improve labor utilization and address staffing challenges [15][17] - The company is committed to being a cost-leading solutions partner to CPGs and retailers despite a softer growth environment [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging labor market impacting event staffing and project execution [9][10] - Despite near-term challenges, management remains optimistic about long-term earnings potential and cash generation [18][28] Other Important Information - The company is lowering its revenue and adjusted EBITDA outlook to flat to down low single digits for the year [18] - The ERP implementation is expected to yield greater cash flow benefits as systems are better utilized [26] Q&A Session Summary Question: Any notable changes in the macro environment? - Management noted improvements in hiring rates and smoothing out of labor challenges in Q2 [33][35] Question: Have labor costs increased? - Management indicated that labor cost inflation is in line with the macro market, not a significant factor in staffing issues [41][42] Question: What type of debt was repurchased? - The company repurchased bonds during the quarter [46] Question: What is the impact of destocking on orders? - Destocking improved as the quarter progressed, but data for April was not yet available [72] Question: Breakdown of consumer products versus food companies? - Approximately 70% of the portfolio is in food, with strong presence in personal care and household goods [76]

Financial Data and Key Metrics Changes - The company's first quarter revenues were $696 million, down 5% year-over-year, and adjusted EBITDA was $58 million, down 18% year-over-year [4][5][15] - The decline in adjusted EBITDA was primarily due to intentional client exits and transformation-related investments [5][15] Business Line Data and Key Metrics Changes - In Branded Services, revenues were $257 million and adjusted EBITDA was $28 million, down 9% year-over-year [18] - Experiential Services generated $221 million in revenues and $12 million in adjusted EBITDA, down 12% year-over-year [19] - Retailer Services had revenues of $218 million and adjusted EBITDA of $18 million, down 3% and 7% year-over-year, respectively [19] Market Data and Key Metrics Changes - Consumer confidence declined, leading to lower consumer purchases and reevaluation of spending by clients [5][6] - Retailers experienced destocking trends, impacting overall order volumes [50][53] Company Strategy and Development Direction - The company is focused on modernizing its tech infrastructure and enhancing analytics capabilities to drive efficiency [11][12] - A task force has been mobilized to improve labor utilization and address staffing challenges [13][14] - The company is committed to being a cost-leading solutions partner to CPGs and retailers despite a softer growth environment [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging labor market affecting event staffing and project execution [7][10] - Despite near-term challenges, the company remains optimistic about future performance and has a robust new business pipeline [6][7] - The revenue and adjusted EBITDA outlook has been lowered to flat to down low single digits due to macroeconomic factors [15][16] Other Important Information - The company ended the quarter with $121 million in cash and a net leverage ratio of approximately 4.4x adjusted EBITDA [20][26] - The ERP implementation is expected to yield greater cash flow benefits as systems are better utilized [25][26] Q&A Session Summary Question: Any notable changes in the macro environment? - Management noted improvements in hiring rates and smoother staffing challenges in Q2 compared to Q1 [32][33] Question: Have labor costs increased due to staffing issues? - Management indicated that labor cost inflation is in line with the macro market, and staffing issues were more related to talent acquisition strategies [39][40] Question: What is the impact of staffing shortages on EBITDA? - The majority of the decline in EBITDA was attributed to staffing shortages [68] Question: Is destocking continuing into Q2? - Destocking improved as Q1 progressed, but data for April was not yet available to confirm if it had completely stopped [70] Question: Breakdown of consumer products versus food companies? - Approximately 70% of the portfolio is in food, with strong presence in personal care and household goods [73]

Q1'25 Earnings May 12, 2025 Disclaimer Forward-Looking Statements Certain statements in this presentation may be considered forward-looking statements within the meaning of the federal securities laws, including statements regarding the expected future performance of Advantage's business and projected financial results. Forward-looking statements generally relate to future events or Advantage's future financial or operating performance. These forward-looking statements generally are identified by the words ...