Advantage Solutions(ADV) - 2025 Q1 - Quarterly Report

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]