Advantage Solutions Inc. (NASDAQ:ADV) Q1 2024 Earnings Conference Call May 9, 2024 8:30 AM ET Company Participants Ruben Mella - Vice President, Investment Relations Dave Peacock - Chief Executive Officer Chris Growe - Chief Financial Officer Sean Choksi - Senior Vice President, Strategy and M&A Conference Call Participants Pallav Saini - Canaccord Genuity Faiza Alwy - Deutsche Bank Operator Greetings. And welcome to the Advantage Solutions First Quarter 2024 Earnings Call. At this time, all participants ar ...

PART I—FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Advantage Solutions reported a Q1 2024 revenue decrease and net loss, significantly improved by a gain from discontinued operations [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $3.63 billion and total liabilities to $2.55 billion as of March 31, 2024, primarily due to debt reduction Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $112,293 | $120,839 | | Total current assets | $932,128 | $1,012,034 | | Goodwill | $833,491 | $833,491 | | Total assets | $3,634,072 | $3,779,323 | | Total current liabilities | $476,928 | $541,297 | | Long-term debt, net of current portion | $1,795,878 | $1,848,118 | | Total liabilities | $2,549,889 | $2,675,246 | | Total stockholders' equity | $1,084,183 | $1,104,077 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q1 2024 revenues decreased to $879.0 million, leading to an operating loss, but a significant gain from discontinued operations reduced the net loss Q1 2024 vs Q1 2023 Performance (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $879,003 | $944,382 | | Operating (loss) income from continuing operations | $(26,762) | $6,744 | | Net loss from continuing operations | $(49,107) | $(34,370) | | Net income (loss) from discontinued operations | $45,992 | $(13,308) | | **Net loss** | **$(3,115)** | **$(47,678)** | | Basic net loss per common share | $(0.02) | $(0.15) | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased to $1.084 billion due to a net loss of $3.1 million and $11.7 million in treasury stock purchases - Key drivers for the change in equity during Q1 2024 included a net loss of **$3.1 million** and the repurchase of treasury stock for **$11.7 million**[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2024 operating activities used cash, while divestitures provided $87.4 million, and financing used cash for debt and share repurchases Cash Flow Summary from Continuing Operations (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(8,894) | $41,396 | | Net cash provided by (used in) investing activities | $68,715 | $(5,988) | | Net cash used in financing activities | $(66,882) | $(6,797) | - Investing activities were significantly impacted by **$87.4 million** in proceeds from divestitures in Q1 2024[12](index=12&type=chunk) - Financing activities in Q1 2024 included **$47.9 million** for repurchases of Senior Secured Notes and **$11.7 million** for the purchase of treasury stock[12](index=12&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail segment reorganization, a $91.0 million divestiture, debt repurchase, goodwill impairment risks, and April 2024 equity grants - Effective January 1, 2024, the company revised its reportable segments to **Branded Services**, **Experiential Services**, and **Retailer Services** to align with its business strategy[18](index=18&type=chunk)[68](index=68&type=chunk) - In January 2024, the company sold its foodservice businesses for approximately **$91.0 million**, recognizing a gain of **$56.6 million** These and other divested businesses are now presented as discontinued operations[34](index=34&type=chunk)[36](index=36&type=chunk) - The company voluntarily repurchased **$51.0 million** of its Senior Secured Notes during Q1 2024, recognizing a gain of **$2.7 million**[50](index=50&type=chunk) - Goodwill impairment tests as of January 1, 2024, indicated that the fair values of the Branded Agencies and Experiential Services reporting units exceeded their carrying values by **less than 20%**[20](index=20&type=chunk) - In April 2024, the company granted **5.3 million RSUs**, **1.1 million PSUs**, and **3.0 million stock options**[91](index=91&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 6.9% revenue decline to a European joint venture deconsolidation, with organic revenue growth of 3.0% and a widened operating loss [Executive Overview](index=33&type=section&id=Executive%20Overview) The company reorganized into three new segments, divesting non-core units to simplify its portfolio and focus on core services - Effective January 1, 2024, the company realigned into three reportable segments: **Branded Services**, **Experiential Services**, and **Retailer Services**[96](index=96&type=chunk) - The company has formally disposed of certain business units as part of a reorganization plan, with these units now classified as discontinued operations[97](index=97&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Q1 2024 revenues decreased 6.9% to $879.0 million due to a European joint venture deconsolidation, with an increased operating loss from reorganization costs Revenue by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Branded Services | $344,529 | $444,862 | $(100,333) | (22.6%) | | Experiential Services | $307,351 | $257,167 | $50,184 | 19.5% | | Retailer Services | $227,123 | $242,353 | $(15,230) | (6.3%) | | **Total Revenues** | **$879,003** | **$944,382** | **$(65,379)** | **(6.9%)** | - Excluding the impact of the European joint venture deconsolidation and foreign exchange rates, total revenues increased by **3.0%**[132](index=132&type=chunk) - The increase in operating loss was primarily due to a **$26.0 million** increase in costs associated with internal reorganization activities, largely related to professional fees and severance[136](index=136&type=chunk)[144](index=144&type=chunk) - Net income from discontinued operations of **$46.0 million** was primarily driven by a **$56.7 million** gain on the divestiture of the foodservice businesses[145](index=145&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted Net Income slightly increased to $14.9 million, but Adjusted EBITDA decreased 14.5% to $78.8 million due to lower revenues and wage inflation Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Branded Services | $41,400 | $61,193 | $(19,793) | (32.3%) | | Experiential Services | $17,125 | $6,862 | $10,263 | 149.6% | | Retailer Services | $20,235 | $24,015 | $(3,780) | (15.7%) | | **Total Adjusted EBITDA** | **$78,760** | **$92,070** | **$(13,310)** | **(14.5%)** | Reconciliation of Net Loss to Adjusted Net Income (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $(3,115) | $(47,678) | | Adjustments (Amortization, Reorganization, etc.) | $18,027 | $61,451 | | **Adjusted Net Income** | **$14,912** | **$13,773** | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Q1 2024 operating activities used cash, while divestitures provided $87.4 million, and financing used cash for debt and share repurchases - Principal uses of cash in Q1 2024 included repurchases of Senior Secured Notes (**$47.9 million**), share repurchases (**$11.7 million**), and principal payments on the Term Loan Facility (**$3.3 million**)[171](index=171&type=chunk) - As of March 31, 2024, the company had **$1.1 billion** outstanding under its Term Loan Facility and **$692.0 million** under its Senior Secured Notes[48](index=48&type=chunk) - The company has access to a **$500.0 million** Revolving Credit Facility, with full capacity available as of March 31, 2024, subject to borrowing base limitations and outstanding letters of credit[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency and interest rate fluctuations, mitigated by derivative instruments, with minimal impact from hypothetical changes - The company's main foreign currency exposure is to the **Canadian dollar**[205](index=205&type=chunk) - Interest rate risk pertains to the Term Loan Facility and Revolving Credit Facility The company uses interest rate cap and collar agreements to manage this exposure[207](index=207&type=chunk) - As of March 31, 2024, the company had interest rate cap and collar contracts with an aggregate notional value of **$950.0 million**[57](index=57&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2024, the company's disclosure controls and procedures were **effective**[210](index=210&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have **materially affected**, or are reasonably likely to materially affect, the company's internal control[211](index=211&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters, including class actions and the 'Take 5 Matter' related to misconduct, with indeterminable potential liability - The company is involved in various litigation, including **class actions** related to California labor laws and commercial disputes[214](index=214&type=chunk)[216](index=216&type=chunk) - A key legal issue is the '**Take 5 Matter**,' which involves misconduct at a previously acquired business (Take 5 Media Group), a subsequent government investigation, and potential liability for which the amount is currently **indeterminable**[217](index=217&type=chunk) [Risk Factors](index=46&type=page&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K were reported - **No material changes** to the risk factors disclosed in the 2023 Annual Report on Form 10-K were reported[218](index=218&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - **None**[218](index=218&type=chunk) [Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - **None**[219](index=219&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[219](index=219&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2024 - **No directors or executive officers adopted or terminated** a Rule 10b5-1 trading arrangement in Q1 2024[220](index=220&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including an amendment to the First Lien Credit Agreement and CEO/CFO certifications - Filed exhibits include **Amendment No. 3 to the First Lien Credit Agreement** and required **CEO/CFO certifications**[221](index=221&type=chunk)

Advantage Solutions Reports First Quarter Results with New Reporting Segments and Reaffirms its 2024 Outlook • Management reaffirms its 2024 outlook as first-quarter results met expectations despite soft market conditions and higher-than-expected costs and investments. • Inclusive of discontinued operations, revenues were $906 million, a 10% decline compared to the prior year and an increase of 1% when excluding the impact of divestitures, foreign exchange, and pass-through costs. Operating income was $31.3 ...

Core Viewpoint - Advantage Solutions Inc. has sold its digital marketing agency Adlucent to BarkleyOKRP, aiming to simplify its portfolio and strengthen its financial position [1][3]. Group 1: Transaction Details - The sale of Adlucent, a performance media business acquired by Advantage in 2016, was completed without disclosing the terms [1]. - The proceeds from the sale will primarily be used to pay down debt [1]. Group 2: Strategic Rationale - The CEO of Advantage Solutions, Dave Peacock, stated that Adlucent will thrive better within a digital-focused independent agency like BarkleyOKRP, allowing Advantage to concentrate on its core growth efforts [2]. - The sale is part of a broader strategy to simplify Advantage's business model, enabling a stronger focus on core capabilities and improving the balance sheet [3]. Group 3: Business Context - Adlucent specializes in performance media activation across major paid channels, including search, social, and CTV, and has established relationships with significant platforms like Amazon, Google, Microsoft, and Meta [2]. - The sale follows a series of strategic moves by Advantage, including the divestiture of foodservice businesses and restructuring of its European joint venture [3].

ST. LOUIS, April 26, 2024 (GLOBE NEWSWIRE) -- Advantage Solutions Inc. (Nasdaq: ADV) announced today that the company will release its first quarter financial results at 7 a.m. ET on May 9, 2024, to be followed by a conference call at 8:30 a.m. ET on the same day. The conference call can be accessed live over the phone by dialing 1-877-407-4018 or, for international callers, 1-201-689-8471. A replay will be available three hours after the call and can be accessed by dialing 1-844-512-2921 or, for internatio ...

ST. LOUIS, April 26, 2024 (GLOBE NEWSWIRE) -- Advantage Solutions Inc. (NASDAQ:ADV) announced today that the company will release its first quarter financial results at 7 a.m. ET on May 9, 2024, to be followed by a conference call at 8:30 a.m. ET on the same day. The conference call can be accessed live over the phone by dialing 1-877-407-4018 or, for international callers, 1-201-689-8471. A replay will be available three hours after the call and can be accessed by dialing 1-844-512-2921 or, for internation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Advantage Solutions Inc. Washington, D.C. 20549 (Exact name of registrant as specified in its charter) FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38990 (State or other jurisdiction of incorporation or organiza ...

Advantage Solutions Inc. (ADV) came out with quarterly earnings of $0.06 per share, missing the Zacks Consensus Estimate of $0.14 per share. This compares to earnings of $0.49 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -57.14%. A quarter ago, it was expected that this company would post earnings of $0.13 per share when it actually produced a loss of $0.07, delivering a surprise of -153.85%.Over the last four quarters, the ...

2023 consolidated revenues were $4.2 billion, a year-over-year increase of 4.3%, and operating income was $76.2 million. Excluding foreign exchange, acquisitions and divestitures, revenues increased 6.8%, and Adjusted EBITDA declined 1.7% to $424.3 million but finished ahead of previous guidance.Solid performance in the fourth quarter resulted in operating income of $46.2 million and a 2% year-over-year increase in Adjusted EBITDA, which increased by 4.4% excluding foreign exchange, acquisitions and divesti ...

Scores of names in “penny stock territory” (stocks trading for $5 or less per share) go unnoticed among the sell-side community, but that doesn’t mean they are completely off their radar. Alongside these more “under the radar” names, are strong buy penny stocks that have received favorable analyst ratings.These include ratings from analysts at well-known “bulge bracket” investment banks, as well as analysts from investment banks and boutique research firms more focused on the small-cap/micro-cap end of the ...