Advantage Solutions(US:ADV)2021-08-08 16:00Financial Performance - For the six months ended June 30, 2021, total revenues increased by $120.0 million, or 7.9%, to $1,640.9 million compared to the same period in 2020[118]. - Operating income for the six months ended June 30, 2021, increased by $48.6 million, or 154.6%, to $42.4 million[118]. - Net income for the same period increased by $63.2 million, or 106.2%, to $5.2 million[119]. - Adjusted EBITDA for the six months ended June 30, 2021, increased by $15.0 million, or 6.9%, to $233.4 million[119]. - Total revenues increased by $208.4 million, or 32.5%, during the three months ended June 30, 2021, compared to the same period in 2020[150]. - Operating income for the three months ended June 30, 2021, was $42.4 million, a significant increase from $3,000 in the same period last year[157]. - Net income was $5.8 million for the three months ended June 30, 2021, compared to a net loss of $37.8 million for the same period in 2020[163]. - Adjusted EBITDA increased by $9.9 million, or 8.9%, to $121.9 million for the three months ended June 30, 2021, from $112.0 million in the prior year[165]. - Total operating income increased by $48.6 million, or 154.6%, to $80.0 million for the six months ended June 30, 2021, driven by revenue growth and cost-saving initiatives[175]. Revenue Segmentation - The sales segment generated approximately 66.8% of total revenues for the six months ended June 30, 2021, while the marketing segment contributed 33.2%[103][104]. - The company experienced a 13.2% increase in sales segment revenues and a 126.7% increase in operating income for the six months ended June 30, 2021, compared to the same period in 2020[116]. - The marketing segment revenues decreased by 1.4% and operating income decreased by 105.6% for the same period[116]. - Sales segment revenues increased by $101.4 million, with $3.7 million from acquired businesses, and an organic revenue increase of $87.3 million primarily due to growth in retail merchandising services[151]. - Marketing segment revenues rose by $107.0 million, including $3.1 million from acquired businesses, with an organic revenue increase of $101.8 million driven by in-store sampling services and digital marketing growth[153]. Acquisitions and Investments - The company acquired three sales businesses during the six months ended June 30, 2021, for an aggregate purchase price of $27.0 million[119]. - The company has completed 66 acquisitions from January 2014 to June 30, 2021, with purchase prices ranging from approximately $0.3 million to $98.5 million[120]. - The company tracks the financial performance of acquired businesses separately, considering revenues generated in the first 12 months post-acquisition as acquired revenues[126]. Cost Management - Cost of revenues as a percentage of revenues was 82.1% for the three months ended June 30, 2021, up from 79.5% in the prior year, attributed to changes in service revenue mix and investments to restart services[154]. - Selling, general, and administrative expenses decreased to 5.5% of revenues from 12.6% year-over-year, primarily due to a $39.6 million reduction in restructuring charges[155]. - Selling, general and administrative expenses decreased to 5.3% of revenues for the six months ended June 30, 2021, down from 8.0% in the same period of 2020, primarily due to a $36.6 million decrease in restructuring charges[173]. - Interest expense decreased by $35.3 million, or 34.1%, to $68.1 million for the six months ended June 30, 2021, due to a reduction in total debt[178]. Liquidity and Cash Flow - Cash flows from operations and borrowings under credit facilities are the principal sources of liquidity, with cash primarily used for operating expenses and acquisitions[141]. - Net cash provided by operating activities for the six months ended June 30, 2021, was $55.92 million, a decrease from $234.43 million in the same period of 2020[199]. - Net cash used in investing activities for the six months ended June 30, 2021, was $33.38 million, compared to $66.81 million in the same period of 2020[201]. - The company reported a net change in cash of $(42.80) million for the six months ended June 30, 2021, compared to an increase of $262.64 million in the same period of 2020[199]. Debt and Financing - The New Revolving Credit Facility has an aggregate principal amount of up to $400.0 million, maturing in October 2025, and is subject to borrowing base capacity[205][206]. - The New Term Loan Facility has an aggregate principal amount of $1.325 billion, with borrowings amortizing in equal quarterly installments of 1.00% per annum[213]. - The company incurred incremental costs of $86.8 million to repay and terminate prior debt arrangements in connection with the Transactions[227]. - The company has $100.0 million drawn on the New Revolving Credit Facility at an assumed interest rate of 2.75%, and $1.325 billion borrowed on the New Term Loan Facility at an assumed interest rate of 6.0%[239]. Tax and Compliance - Provision for income taxes was $8.3 million for the six months ended June 30, 2021, compared to a benefit of $12.3 million in the same period of 2020[179]. - The company recorded a deferred tax liability of approximately $2.1 million for unremitted earnings in Canada as of December 31, 2020, indicating a need for tax-efficient repatriation strategies[229]. - The company anticipates additional expenses related to operating as a public company, including compliance and reporting obligations[133]. Future Outlook - The company expects the impact of the COVID-19 pandemic to decrease in the second half of 2021 as businesses and individuals resume more in-person activities[117]. - The company expects existing domestic cash flows to be sufficient to fund operations and cash commitments for at least the next 12 months[229]. - Future strategies may include refinancing existing debt or entering into additional interest rate cap agreements to manage interest rate risk[244].