Advantage Solutions(US:ADV)2025-11-06 21:23Financial Performance - Revenues for Q3 2025 were $915.0 million, a decrease of 2.6% from $939.3 million in Q3 2024[95] - Operating income from continuing operations increased to $40.2 million in Q3 2025, compared to a loss of $3.2 million in Q3 2024, representing a 1364.1% improvement[95] - Net income from continuing operations was $20.6 million in Q3 2025, a significant recovery from a net loss of $37.3 million in Q3 2024, marking a 155.1% increase[95] - Adjusted Net Income for Q3 2025 was $54.0 million, up 128.0% from $23.7 million in Q3 2024[95] - Adjusted EBITDA for Q3 2025 was $99.6 million, slightly down 1.4% from $100.9 million in Q3 2024[96] - Total revenues for the three months ended September 30, 2025, were $915.0 million, a decrease of $24.3 million or 2.6% compared to $939.3 million in the same period of 2024[109] - Total revenues for the nine months ended September 30, 2025, were $2.61 billion, a decrease of $63.5 million or 2.4% compared to $2.67 billion in the same period of 2024[122] Segment Performance - The Branded Services segment contributed approximately 33.5% of total revenues in the nine months ended September 30, 2025, down from 36.8% in the same period of 2024[91] - The Experiential Services segment generated approximately 39.8% of revenues in the nine months ended September 30, 2025, up from 36.3% in 2024[92] - The Retailer Services segment accounted for approximately 26.7% of revenues in the nine months ended September 30, 2025, slightly down from 27.0% in 2024[94] - Branded Services segment revenues decreased by $42.6 million or 12.8% to $288.8 million, primarily due to lower volumes and client losses[109] - Experiential Services segment revenues increased by $35.0 million or 10.2% to $377.7 million, driven by higher event volume and improved demand[110] - Retailer Services segment revenues decreased by $16.7 million or 6.3% to $248.5 million, primarily due to lower volumes in the existing client base[111] Operating Income and Expenses - Operating income from continuing operations for the three months ended September 30, 2025, was $40.2 million, compared to an operating loss of $3.2 million in the same period of 2024, representing an improvement of $43.3 million[115] - Selling, general, and administrative expenses as a percentage of revenues decreased to 6.3% for the three months ended September 30, 2025, from 10.5% in 2024, primarily due to lower restructuring costs[113] - Cost of revenues as a percentage of revenues increased slightly to 84.9% for the three months ended September 30, 2025, compared to 84.6% in 2024, mainly due to higher variable labor costs[112] Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2025, was $15.9 million, a decrease of $62.1 million compared to $78.0 million in the same period of 2024[1] - Net cash used in investing activities during the nine months ended September 30, 2025, was $(13.7) million, compared to $211.4 million provided in the same period of 2024[1] - As of September 30, 2025, the company had $201.1 million in cash and cash equivalents and $635.4 million in accounts receivable, indicating strong liquidity[1] - The company had unused capacity under its Revolving Credit Facility of $446.3 million as of September 30, 2025[1] - Cash flows used in financing activities during the nine months ended September 30, 2025, were $(9.9) million, primarily related to debt repayments[1] - The company expects existing domestic cash and cash flows from operations to be sufficient to fund its operating activities and cash commitments for at least the next 12 months[1] Tax and Interest - The company recognized a tax benefit of $3.5 million for the nine months ended September 30, 2025, compared to $38.0 million in the prior year, primarily due to a change in the effective tax rate[133] - Interest expense decreased by $9.4 million, or 8.2%, to $105.1 million due to lower interest rates and a reduced debt balance[132] Adjusted Metrics - Adjusted EBITDA from continuing operations for the three months ended September 30, 2025, was $99.6 million, representing a 10.9% margin[1] - Adjusted Net Income for the nine months ended September 30, 2025, was $52,335, compared to $54,889 in the prior year[137] - Adjusted EBITDA from Continuing Operations for the nine months ended September 30, 2025, was $244,142, down from $261,458 in the prior year[141] Other Financial Information - The company experienced a one-time gain from divesting an equity stake in a foodservice business, contributing to the improved net income[95] - Broader macroeconomic headwinds continued to negatively impact the Branded and Retailer Services segments despite strong performance in the Experiential Services segment[96] - The company recorded a deferred tax liability of approximately $0.9 million for unremitted earnings in Canada as of September 30, 2025[1] - The company has a share repurchase program authorized for up to $100.0 million of its Class A common stock[1] Risk Management - The company estimates that a 10% unfavorable change in foreign exchange rates would decrease consolidated income before taxes by approximately $3.4 million for the nine months ended September 30, 2025[176] - The company uses financial derivative instruments to hedge foreign currency exchange rate risks associated with Canadian operations[175] - The cumulative translation effects for subsidiaries using a functional currency other than the U.S. dollar are included in accumulated other comprehensive loss as a separate component of stockholders' equity[176] - The company has interest rate collar contracts with an aggregate notional value of $700.0 million as of September 30, 2025, to manage exposure to interest rate movements[179] - A change of one-eighth percentage point in the weighted average interest rate above the floor of 0.75% would result in an increase of $1.0 million in interest expense for the nine months ended September 30, 2025[180] - The company does not intend to enter into derivative or interest rate cap transactions for speculative purposes[181] - Other new accounting pronouncements recently issued did not have a material impact on the company's condensed consolidated financial statements[174]