Advantage Solutions Inc. (NASDAQ: ADV) (“Advantage,” “Advantage
Solutions,” the “Company,” “we” or “our”), a leading provider of
outsourced sales and marketing services to consumer goods
manufacturers and retailers, today reported financial results for
its second quarter ended June 30, 2023. The results continue to
reflect a trendline of improving revenue and Adjusted EBITDA
performance for the Company. Revenues for the quarter grew 5.7%
year-over-year, an increase of 6.1% excluding foreign exchange, to
reach $1.0 billion, and Adjusted EBITDA for the quarter reached
$104.2 million, down 3.8% year-over year with a margin decline of
approximately 100 basis points. The decline in Adjusted EBITDA
reflects an improvement in dollar and margin trajectory relative to
prior quarter (which, in the first quarter of 2023, had decreased
4.8% in dollars and approximately 150 basis points in margin, in
each case, on a year-over-year basis) and includes the impact of
the completed divestiture.
“We’re proud to deliver another consecutive quarter of strong
company performance while advancing our transformation journey to
position Advantage for long-term, profitable growth,” said
Advantage Solutions CEO Dave Peacock. “We‘re taking a strategic
approach to strengthen our culture, simplify our operations,
improve our financial discipline and enhance our processes as a
unified company. These efforts are designed to deliver more value
to our stakeholders and better position our business in the
marketplace. Our reach, relationships, insights and expertise are
unmatched, and I remain confident in our capabilities delivering
critical, need-to-have solutions for the world’s largest CPG and
retail companies.”
Peacock continued, “Despite an unprecedently tight labor supply,
our year-over-year topline growth of approximately 6% in the second
quarter was primarily driven by continued volume growth as well as
success in pricing realization. Our capital allocation philosophy
has maintained a focus on maximizing returns for our equity
holders, including deleveraging our balance sheet, as reinforced by
our continued voluntary repurchases of our term loan, and investing
behind our core business offerings. Over the quarter, we continued
to bolster our roster of world-class talent, and our executive
leadership team is working hard to implement best-in-class
practices across the enterprise. We plan to continue growing value
for our stakeholders.”
Second Quarter 2023 Highlights
Revenues
|
Three Months Ended June 30, |
|
Change |
(amounts in
thousands) |
|
2023 |
|
|
2022 |
|
$ |
|
% |
Sales |
$ |
599,828 |
|
$ |
604,132 |
|
$ |
(4,304 |
) |
|
(0.7 |
)% |
Marketing |
|
437,227 |
|
|
376,944 |
|
|
60,283 |
|
|
16.0 |
% |
Total revenues |
$ |
1,037,055 |
|
$ |
981,076 |
|
$ |
55,979 |
|
|
5.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA and Adjusted EBITDA by
Segment
|
Three Months Ended June 30, |
|
Change |
(amounts in
thousands) |
|
2023 |
|
|
2022 |
|
$ |
|
% |
Sales |
$ |
63,678 |
|
$ |
71,753 |
|
$ |
(8,075 |
) |
|
(11.3 |
)% |
Marketing |
|
40,534 |
|
|
36,569 |
|
|
3,965 |
|
|
10.8 |
% |
Total Adjusted EBITDA |
$ |
104,212 |
|
$ |
108,322 |
|
$ |
(4,110 |
) |
|
(3.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Revenues for the second quarter were $1,037.1 million, up $56.0
million, or 5.7%, from second quarter 2022 revenues of $981.1
million. Excluding the impact of unfavorable foreign exchange rates
and acquisitions / divestitures, revenues increased 7.7%.
- Operating income in the quarter was $22.3 million, compared
with operating income of $28.3 million in the second quarter of
2022.
- Adjusted EBITDA in the quarter was $104.2 million compared with
Adjusted EBITDA of $108.3 million in the second quarter of
2022.
- Net loss in the quarter was $7.8 million compared with net
income of $3.7 million in the second quarter of 2022.
The year-over-year increase in revenues was driven by $60.3
million of growth in the marketing segment (an increase of 16%
year-over-year) with a sales segment decline of $4.3 million, or 1%
year over year. Second quarter growth in the marketing segment was
driven primarily by the continued recovery of our in-store sampling
and demonstration services, with digital services starting to show
signs of stabilization. The second quarter decline in the sales
segment was driven by the completed divestiture and intentional and
previously anticipated client exit, partially offset by an increase
in retail merchandising services, pricing realization and growth in
our European joint venture.
The $6.0 million decline to $22.3 million of operating income
was primarily due to inflationary cost pressures, the completed
divestiture and ongoing mix shift dynamics across the
enterprise.
The year-over-year decline in Adjusted EBITDA was primarily due
to the decline in operating income.
The year-over-year decrease in net income was driven by the
decline in operating income and an increase in interest expense due
to the rising interest rate environment, partially offset by lower
debt balances.
Balance Sheet Highlights
As of June 30, 2023, the Company’s cash and cash equivalents
were $164.7 million, total debt was $2,019.8 million and Net Debt
was $1,855.1 million. The debt capitalization consists primarily of
the $1,237.5 million First Lien Term Loan and $775.0 million of
senior secured notes as of June 30, 2023.
During the quarter, Advantage voluntarily repurchased
approximately $52.4 million of its First Lien Term Loan at an
attractive discount, resulting in a net leverage ratio of
approximately 4.3x LTM Adjusted EBITDA as of June 30, 2023.
Approximately 85% of the Company’s debt is hedged or at a fixed
interest rate.
Fiscal Year 2023 Outlook
The Company is reiterating its guidance for fiscal 2023 with
Adjusted EBITDA anticipated to range from $400 million to $420
million, including the impact of completed divestitures. Our
guidance contemplates the continued realization of pricing, growth
in in-store sampling and demonstration events and further
investments behind technology and talent.
Conference Call Details
Advantage will host a conference call at 8:30 am ET on August 4,
2023 to discuss its second quarter 2023 financial performance and
business outlook. To participate, please dial 877-407-4018 within
the United States or +1-201-689-8471 outside the United States
approximately 10 minutes before the scheduled start of the call.
The conference ID for the call is 13739354. The conference call
will also be accessible live via audio broadcast on the Investor
Relations section of the Advantage website at
ir.advantagesolutions.net.
A replay of the conference call will be available online on the
investor section of the Advantage website. In addition, an audio
replay of the call will be available for one week following the
call and can be accessed by dialing 844-512-2921 within the United
States or +1-412-317-6671 outside the United States. The replay ID
is 13739354.
About Advantage Solutions
Advantage Solutions (NASDAQ: ADV) is a leading provider of
outsourced sales and marketing solutions that is uniquely
positioned at the intersection of brands and retailers. Our data-
and technology-driven services — which include headquarter sales,
retail merchandising, in-store and online sampling, digital
commerce, omnichannel marketing, retail media and others — help
brands and retailers of all sizes get products into the hands of
consumers, wherever they shop. As a trusted partner and problem
solver, we help our clients sell more while spending less.
Headquartered in Irvine, California, Advantage has offices
throughout North America and strategic investments in select
markets throughout Africa, Asia, Australia and Europe through which
the Company serves the global needs of multinational, regional and
local manufacturers. For more information, please visit
advantagesolutions.net.
Included with this press release are the
Company’s consolidated and condensed financial statements as of and
for the three and six months ended June 30, 2023. These financial
statements should be read in conjunction with the
information contained in the Company’s Quarterly Report on Form
10-Q, to be filed with the Securities and Exchange Commission on
August 4, 2023.
Forward-Looking Statements
Certain statements in this press release 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 “may”, “should”, “expect”, “intend”,
“will”, “would”, “could”, “estimate”, “anticipate”, “believe”,
“predict”, “confident”, “potential” or “continue”, or the negatives
of these terms or variations of them or similar terminology. Such
forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to
risks, uncertainties and other factors which could cause actual
results to differ materially from those expressed or implied by
such forward looking statements.
These forward-looking statements are based upon
estimates and assumptions that, while considered reasonable by
Advantage and its management at the time of such statements, are
inherently uncertain. Factors that may cause actual results to
differ materially from current expectations include, but are not
limited to, market-driven wage changes or changes to labor laws or
wage or job classification regulations, including minimum wage; the
COVID-19 pandemic and the measures taken in response thereto; the
availability, acceptance, administration and effectiveness of any
COVID-19 vaccine; Advantage’s ability to continue to generate
significant operating cash flow; client procurement strategies and
consolidation of Advantage’s clients’ industries creating pressure
on the nature and pricing of its services; consumer goods
manufacturers and retailers reviewing and changing their sales,
retail, marketing and technology programs and relationships;
Advantage’s ability to successfully develop and maintain relevant
omni-channel services for our clients in an evolving industry and
to otherwise adapt to significant technological change; Advantage’s
ability to maintain proper and effective internal control over
financial reporting in the future; potential and actual harms to
Advantage’s business arising from the Take 5 Matter; Advantage’s
substantial indebtedness and our ability to refinance at favorable
rates; and other risks and uncertainties set forth in the section
titled “Risk Factors” in the Annual Report on Form 10-K filed by
the Company with the Securities and Exchange Commission (the “SEC”)
on March 1, 2023, and in its other filings made from time to time
with the SEC. These filings identify and address other important
risks and uncertainties that could cause actual events and results
to differ materially from those contained in the forward-looking
statements. Forward-looking statements speak only as of the date
they are made. Readers are cautioned not to put undue reliance on
forward-looking statements, and Advantage assumes no obligation and
does not intend to update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Non-GAAP Financial Measures and Related
Information
This press release includes certain financial
measures not presented in accordance with generally accepted
accounting principles (“GAAP”), including Adjusted EBITDA and Net
Debt. These are not measures of financial performance calculated in
accordance with GAAP and may exclude items that are significant in
understanding and assessing Advantage’s financial results.
Therefore, the measures are in addition to, and not a substitute
for or superior to, measures of financial performance prepared in
accordance with GAAP, and should not be considered in isolation or
as an alternative to net income, cash flows from operations or
other measures of profitability, liquidity or performance under
GAAP. You should be aware that Advantage’s presentation of these
measures may not be comparable to similarly titled measures used by
other companies. Reconciliations of historical non-GAAP measures to
their most directly comparable GAAP counterparts are included
below.
Advantage believes these non-GAAP measures
provide useful information to management and investors regarding
certain financial and business trends relating to Advantage’s
financial condition and results of operations. Advantage believes
that the use of Adjusted EBITDA and Net Debt provides an additional
tool for investors to use in evaluating ongoing operating results
and trends and in comparing Advantage’s financial measures with
other similar companies, many of which present similar non-GAAP
financial measures to investors. Non-GAAP financial measures are
subject to inherent limitations as they reflect the exercise of
judgments by management about which expense and income are excluded
or included in determining these non-GAAP financial measures.
Additionally, other companies may calculate non-GAAP measures
differently, or may use other measures to calculate their financial
performance, and therefore Advantage’s non-GAAP measures may not be
directly comparable to similarly titled measures of other
companies.
Adjusted EBITDA means net (loss) income before
(i) interest expense, net, (ii) provision for (benefit from) income
taxes, (iii) depreciation, (iv) amortization of intangible assets,
(v) equity-based compensation of Karman Topco L.P., (vi) changes in
fair value of warrant liability, (vii) stock based compensation
expense, (viii) fair value adjustments of contingent consideration
related to acquisitions, (ix) acquisition-related expenses, (x)
loss on disposal of assets, (xi) costs associated with COVID-19,
net of benefits received, (xii) EBITDA for economic interests in
investments, (xiii) reorganization and restructuring expenses,
(xiv) litigation expenses, (xv) recovery from Take 5, (xvi) costs
associated with the Take 5 Matter and (xvii) other adjustments that
management believes are helpful in evaluating our operating
performance.
Net Debt represents the sum of current portion
of long-term debt and long-term debt, less cash and cash
equivalents and debt issuance costs. With respect to Net Debt, cash
and cash equivalents are subtracted from the GAAP measure, total
debt, because they could be used to reduce the debt obligations. We
present Net Debt because we believe this non-GAAP measure provides
useful information to management and investors regarding certain
financial and business trends relating to the Company’s financial
condition and to evaluate changes to the Company's capital
structure and credit quality assessment.
Due to rounding, numbers presented throughout
this document may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
This press release also includes certain
estimates and projections of Adjusted EBITDA, including with
respect to expected fiscal 2023 results. Due to the high
variability and difficulty in making accurate estimates and
projections of some of the information excluded from Adjusted
EBITDA, together with some of the excluded information not being
ascertainable or accessible, Advantage is unable to quantify
certain amounts that would be required to be included in the most
directly comparable GAAP financial measures without unreasonable
effort. Consequently, no disclosure of estimated or projected
comparable GAAP measures is included and no reconciliation of such
forward-looking non-GAAP financial measures is included.
Advantage Solutions
Inc.Condensed Consolidated Balance
Sheets(Unaudited)
|
June 30, |
|
December 31, |
(in thousands, except share data) |
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
164,678 |
|
|
$ |
120,715 |
|
Restricted cash |
|
17,474 |
|
|
|
17,817 |
|
Accounts receivable, net of allowance for expected credit losses
of $31,053 and $22,752, respectively |
|
816,348 |
|
|
|
869,000 |
|
Prepaid expenses and other current assets |
|
121,639 |
|
|
|
149,476 |
|
Total current assets |
|
1,119,139 |
|
|
|
1,157,008 |
|
Property and equipment, net |
|
76,075 |
|
|
|
70,898 |
|
Goodwill |
|
890,286 |
|
|
|
887,949 |
|
Other intangible assets, net |
|
1,791,995 |
|
|
|
1,897,503 |
|
Investments in unconsolidated
affiliates |
|
130,359 |
|
|
|
129,491 |
|
Other assets |
|
114,245 |
|
|
|
119,522 |
|
Total assets |
$ |
4,122,099 |
|
|
$ |
4,262,371 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Current portion of long-term debt |
$ |
15,522 |
|
|
$ |
13,991 |
|
Accounts payable |
|
218,445 |
|
|
|
261,464 |
|
Accrued compensation and benefits |
|
155,018 |
|
|
|
154,744 |
|
Other accrued expenses |
|
156,454 |
|
|
|
133,173 |
|
Deferred revenues |
|
50,084 |
|
|
|
37,329 |
|
Total current liabilities |
|
595,523 |
|
|
|
600,701 |
|
Long-term debt, net of current
portion |
|
1,966,211 |
|
|
|
2,022,819 |
|
Deferred income tax
liabilities |
|
264,983 |
|
|
|
297,874 |
|
Other long-term liabilities |
|
94,992 |
|
|
|
111,507 |
|
Total liabilities |
|
2,921,709 |
|
|
|
3,032,901 |
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interest |
|
3,784 |
|
|
|
3,746 |
|
|
|
|
|
Equity attributable to
stockholders of Advantage Solutions Inc. |
|
|
|
Common stock, $0.0001 par value, 3,290,000,000 shares
authorized; 324,481,143 and 319,690,300 shares
issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively |
|
32 |
|
|
|
32 |
|
Additional paid in capital |
|
3,427,490 |
|
|
|
3,408,836 |
|
Accumulated deficit |
|
(2,303,458 |
) |
|
|
(2,247,109 |
) |
Loans to Karman Topco L.P. |
|
(6,375 |
) |
|
|
(6,363 |
) |
Accumulated other comprehensive loss |
|
(13,603 |
) |
|
|
(18,849 |
) |
Treasury stock, at cost; 1,610,014 shares as of June 30,
2023 and December 31, 2022, respectively |
|
(12,567 |
) |
|
|
(12,567 |
) |
Total equity attributable to stockholders of
Advantage Solutions Inc. |
|
1,091,519 |
|
|
|
1,123,980 |
|
Nonredeemable noncontrolling
interest |
|
106,087 |
|
|
|
101,744 |
|
Total stockholders’ equity |
|
1,197,606 |
|
|
|
1,225,724 |
|
Total liabilities, redeemable noncontrolling interest,
and stockholders’ equity |
$ |
4,122,099 |
|
|
$ |
4,262,371 |
|
Advantage Solutions
Inc.Condensed Consolidated Statements of
Operations and Comprehensive (Loss)
Income(Unaudited)
|
Three Months Ended June 30, |
(in thousands, except share and per share
data) |
|
2023 |
|
|
|
2022 |
|
Revenues |
$ |
1,037,055 |
|
|
$ |
981,076 |
|
Cost of revenues (exclusive
of depreciation and amortization
shown separately below) |
|
904,761 |
|
|
|
841,790 |
|
Selling, general, and
administrative expenses |
|
53,285 |
|
|
|
52,576 |
|
Depreciation and
amortization |
|
56,738 |
|
|
|
58,444 |
|
Total operating expenses |
|
1,014,784 |
|
|
|
952,810 |
|
Operating income |
|
22,271 |
|
|
|
28,266 |
|
Other expenses (income): |
|
|
|
Change in fair value of warrant
liability |
|
74 |
|
|
|
(4,914 |
) |
Interest expense, net |
|
30,459 |
|
|
|
28,188 |
|
Total other expenses |
|
30,533 |
|
|
|
23,274 |
|
(Loss) income before income
taxes |
|
(8,262 |
) |
|
|
4,992 |
|
(Benefit from) provision for
income taxes |
|
(416 |
) |
|
|
1,316 |
|
Net (loss) income |
|
(7,846 |
) |
|
|
3,676 |
|
Less: net income attributable to noncontrolling
interest |
|
916 |
|
|
|
305 |
|
Net (loss) income attributable to
stockholders of Advantage Solutions Inc. |
|
(8,762 |
) |
|
|
3,371 |
|
Other comprehensive income
(loss), net of tax: |
|
|
|
Foreign currency translation adjustments |
|
3,722 |
|
|
|
(13,272 |
) |
Total comprehensive loss
attributable to stockholders ofAdvantage Solutions Inc. |
$ |
(5,040 |
) |
|
$ |
(9,901 |
) |
|
|
|
|
Basic (loss) earnings per common share |
$ |
(0.03 |
) |
|
$ |
0.01 |
|
Diluted (loss) earnings per common share |
$ |
(0.03 |
) |
|
$ |
0.01 |
|
|
|
|
|
Weighted-average number of common shares: |
|
324,178,691 |
|
|
|
318,418,746 |
|
Weighted-average number of common shares, assuming
dilution |
|
324,178,691 |
|
|
|
319,114,865 |
|
Advantage Solutions
Inc.Condensed Consolidated Statement of Cash
Flows(Unaudited)
|
Six Months Ended June 30, |
(in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
Net (loss) income |
$ |
(55,524 |
) |
|
$ |
21,210 |
|
Adjustments to reconcile net
(loss) income to net cash provided by operating
activities |
|
|
|
Noncash interest income |
|
(9,458 |
) |
|
|
(26,564 |
) |
Amortization of deferred financing fees |
|
4,238 |
|
|
|
4,428 |
|
Depreciation and amortization |
|
113,842 |
|
|
|
116,212 |
|
Change in fair value of warrant liability |
|
— |
|
|
|
(20,356 |
) |
Fair value adjustments related to contingent consideration |
|
9,360 |
|
|
|
5,788 |
|
Deferred income taxes |
|
(33,179 |
) |
|
|
(11,648 |
) |
Equity-based compensation of Karman Topco L.P. |
|
(3,487 |
) |
|
|
(6,314 |
) |
Stock-based compensation |
|
22,436 |
|
|
|
22,732 |
|
Equity in earnings of unconsolidated affiliates |
|
(3,002 |
) |
|
|
(4,687 |
) |
Distribution received from unconsolidated affiliates |
|
1,611 |
|
|
|
1,143 |
|
Loss on sale of businesses and assets held for sale |
|
17,655 |
|
|
|
— |
|
Gain on repurchases of Term Loan Facility debt |
|
(4,969 |
) |
|
|
— |
|
Loss on disposal of assets |
|
— |
|
|
|
2,850 |
|
Changes in operating assets and liabilities, net of effects from
divestitures and purchases of businesses: |
|
|
|
Accounts receivable, net |
|
50,006 |
|
|
|
(11,053 |
) |
Prepaid expenses and other assets |
|
20,489 |
|
|
|
(42,580 |
) |
Accounts payable |
|
(40,379 |
) |
|
|
(26,485 |
) |
Accrued compensation and benefits |
|
365 |
|
|
|
(9,260 |
) |
Deferred revenues |
|
12,286 |
|
|
|
(539 |
) |
Other accrued expenses and other liabilities |
|
2,700 |
|
|
|
15,115 |
|
Net cash provided by operating activities |
|
104,990 |
|
|
|
29,992 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
Purchase of businesses, net of
cash acquired |
|
— |
|
|
|
(67,611 |
) |
Purchase of property and
equipment |
|
(18,552 |
) |
|
|
(21,533 |
) |
Proceeds from divestiture |
|
12,763 |
|
|
|
— |
|
Net cash used in investing activities |
|
(5,789 |
) |
|
|
(89,144 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
Borrowings under lines of
credit |
|
72,735 |
|
|
|
67,134 |
|
Payments on lines of credit |
|
(71,278 |
) |
|
|
(22,034 |
) |
Proceeds from issuance of
long-term debt |
|
— |
|
|
|
278 |
|
Proceeds from government loans
for COVID-19 relief |
|
1,384 |
|
|
|
— |
|
Principal payments on long-term
debt |
|
(6,786 |
) |
|
|
(6,653 |
) |
Repurchases of Term Loan Facility
debt |
|
(49,427 |
) |
|
|
— |
|
Proceeds from issuance of common
stock |
|
1,193 |
|
|
|
1,653 |
|
Payments for taxes related to net
share settlement under 2020 Incentive Award Plan |
|
(1,277 |
) |
|
|
— |
|
Contingent consideration
payments |
|
(1,867 |
) |
|
|
(20,882 |
) |
Holdback payments |
|
(1,598 |
) |
|
|
(715 |
) |
Redemption of noncontrolling
interest |
|
(154 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
(57,075 |
) |
|
|
18,781 |
|
Net effect of foreign currency
changes on cash |
|
1,494 |
|
|
|
(6,603 |
) |
Net change in cash, cash
equivalents and restricted cash |
|
43,620 |
|
|
|
(46,974 |
) |
Cash, cash equivalents and
restricted cash, beginning of period |
|
138,532 |
|
|
|
180,637 |
|
Cash, cash equivalents and
restricted cash, end of period |
$ |
182,152 |
|
|
$ |
133,663 |
|
SUPPLEMENTAL CASH FLOW
INFORMATION |
|
|
|
Purchase of property and
equipment recorded in accounts payable and accrued
expenses |
$ |
1,507 |
|
|
$ |
311 |
|
Advantage Solutions
Inc.Reconciliation of Net Income (Loss) to
Adjusted EBITDA(Unaudited)
Consolidated |
Three Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
(in
thousands) |
|
|
|
Net (loss) income |
$ |
(7,846 |
) |
|
$ |
3,676 |
|
Add: |
|
|
|
Interest expense, net |
|
30,459 |
|
|
|
28,188 |
|
(Benefit from) provision for
income taxes |
|
(416 |
) |
|
|
1,316 |
|
Depreciation and
amortization |
|
56,738 |
|
|
|
58,444 |
|
Equity-based compensation of
Karman Topco L.P.(a) |
|
(1,218 |
) |
|
|
(3,519 |
) |
Change in fair value of warrant
liability |
|
74 |
|
|
|
(4,914 |
) |
Stock-based compensation
expense(b) |
|
11,226 |
|
|
|
14,961 |
|
Fair value adjustments related to
contingent consideration related to acquisitions(c) |
|
5,068 |
|
|
|
3,654 |
|
Acquisition-related
expenses(d) |
|
498 |
|
|
|
5,998 |
|
Loss on disposal of
assets(g) |
|
1,158 |
|
|
|
— |
|
EBITDA for economic interests in
investments(l) |
|
(2,457 |
) |
|
|
(1,020 |
) |
Reorganization and restructuring
expenses(e) |
|
5,837 |
|
|
|
253 |
|
Litigation expenses(f) |
|
4,350 |
|
|
|
(800 |
) |
Costs associated with COVID-19,
net of benefits received(i) |
|
2,317 |
|
|
|
1,362 |
|
Recovery from Take 5(n) |
|
(1,675 |
) |
|
|
— |
|
Costs associated with the Take 5
Matter(j) |
|
99 |
|
|
|
723 |
|
Adjusted EBITDA |
$ |
104,212 |
|
|
$ |
108,322 |
|
Sales
Segment |
Three Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
(in
thousands) |
|
|
|
Operating income |
$ |
7,123 |
|
|
$ |
15,177 |
|
Add: |
|
|
|
Depreciation and
amortization |
|
39,390 |
|
|
|
40,543 |
|
Equity-based compensation of
Karman Topco L.P.(a) |
|
(580 |
) |
|
|
(2,032 |
) |
Stock-based compensation
expense(b) |
|
6,313 |
|
|
|
9,171 |
|
Fair value adjustments related
to contingent consideration related to acquisitions(c) |
|
3,804 |
|
|
|
6,090 |
|
Acquisition-related
expenses(d) |
|
366 |
|
|
|
3,540 |
|
Loss on disposal of
assets(g) |
|
1,710 |
|
|
|
— |
|
EBITDA for economic interests
in investments(l) |
|
(2,415 |
) |
|
|
(1,155 |
) |
Reorganization and
restructuring expenses(e) |
|
3,340 |
|
|
|
340 |
|
Litigation expenses
(recovery)(f) |
|
4,350 |
|
|
|
(100 |
) |
Costs associated with
COVID-19, net of benefits received(i) |
|
277 |
|
|
|
179 |
|
Sales Segment Adjusted
EBITDA |
$ |
63,678 |
|
|
$ |
71,753 |
|
Marketing
Segment |
Three Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
(in
thousands) |
|
|
|
Operating income |
$ |
15,148 |
|
|
$ |
13,089 |
|
Add: |
|
|
|
Depreciation and
amortization |
|
17,348 |
|
|
|
17,901 |
|
Equity-based compensation of
Karman Topco L.P.(a) |
|
(638 |
) |
|
|
(1,487 |
) |
Stock-based compensation
expense(b) |
|
4,913 |
|
|
|
5,790 |
|
Fair value adjustments related to
contingent consideration related to acquisitions(c) |
|
1,264 |
|
|
|
(2,436 |
) |
Acquisition-related
expenses(d) |
|
132 |
|
|
|
2,458 |
|
Loss on disposal of
assets(g) |
|
(552 |
) |
|
|
— |
|
EBITDA for economic interests in
investments(l) |
|
(42 |
) |
|
|
135 |
|
Reorganization and restructuring
expenses(e) |
|
2,497 |
|
|
|
(87 |
) |
Litigation recovery(f) |
|
— |
|
|
|
(700 |
) |
Costs associated with COVID-19,
net of benefits received(i) |
|
2,040 |
|
|
|
1,183 |
|
Recovery from Take 5(n) |
|
(1,675 |
) |
|
|
— |
|
Costs associated with the Take 5
Matter(j) |
|
99 |
|
|
|
723 |
|
Marketing Segment Adjusted
EBITDA |
$ |
40,534 |
|
|
$ |
36,569 |
|
(a) |
Represents expenses related to (i) equity-based compensation
expense associated with grants of Common Series D Units of Topco
made to one of the equity holders of Topco and (ii) equity-based
compensation expense associated with the Common Series C Units of
Topco. |
(b) |
Represents non-cash compensation
expense related to the 2020 Incentive Award Plan and the 2020
Employee Stock Purchase Plan. |
(c) |
Represents adjustments to the
estimated fair value of our contingent consideration liabilities
related to our acquisitions. For additional information see the
condensed financial statements and footnotes to be included in the
Company Form 10-Q filing for the three and six months ended June
30, 2023 and 2022. |
(d) |
Represents fees and costs
associated with activities related to our acquisitions and related
reorganization activities, including professional fees, due
diligence, and integration activities. |
(e) |
Represents fees and costs
associated with various internal reorganization activities,
including professional fees, lease exit costs, severance, and
nonrecurring compensation costs. |
(f) |
Represents legal settlements,
reserves, and expenses that are unusual or infrequent costs
associated with our operating activities. |
(g) |
Represents losses on disposal of
assets related to divestitures and losses on sale of businesses and
assets held for sale, less cost to sell. |
(h) |
Represents the amortization of
intangible assets recorded in connection with the 2014 Topco
Acquisition and our other acquisitions. |
(i) |
Represents (i) costs related to
implementation of strategies for workplace safety in response to
COVID-19, including additional sick pay for front-line associates
and personal protective equipment; and (ii) benefits received from
government grants for COVID-19 relief. |
(j) |
Represents costs associated with
the Take 5 Matter, primarily, professional fees and other related
costs. |
(k) |
Represents the tax provision or
benefit associated with the adjustments above, taking into account
the Company’s applicable tax rates, after excluding adjustments
related to items that do not have a related tax impact. |
(l) |
Represents additions to reflect
our proportional share of Adjusted EBITDA related to our equity
method investments and reductions to remove the Adjusted EBITDA
related to the minority ownership percentage of the entities that
we fully consolidate in our financial statements. |
(m) |
Represents a gain associated with
the repurchases from the Term Loan Facility during the three months
ended June 30, 2023. For additional information, see the condensed
financial statements and footnotes to be included in the Company
Form 10-Q filing for the three and six months ended June 30, 2023
and 2022. |
(n) |
Represents cash receipts from an
insurance policy for claims related to the Take 5 Matter. |
|
|
Advantage Solutions
Inc.Disaggregated
revenues(Unaudited)
|
Three Months Ended June 30, |
|
|
2023 |
|
|
2022 |
(in
thousands) |
|
|
|
Sales brand-centric
services |
$ |
346,763 |
|
$ |
332,874 |
Sales retail-centric
services |
|
253,065 |
|
|
271,258 |
Total sales revenues |
|
599,828 |
|
|
604,132 |
Marketing brand-centric
services |
|
135,312 |
|
|
136,340 |
Marketing retail-centric
services |
|
301,915 |
|
|
240,604 |
Total marketing revenues |
|
437,227 |
|
|
376,944 |
Total revenues |
$ |
1,037,055 |
|
$ |
981,076 |
Advantage Solutions
Inc.Reconciliation of Total Debt to Net
Debt(Unaudited)
|
June 30, |
|
December 31, |
|
June 30, |
(in
millions) |
2023 |
|
|
2022 |
|
|
2022 |
|
Current portion of long-term debt |
$ |
15.5 |
|
|
$ |
14.0 |
|
|
$ |
59.8 |
|
Long-term debt, net of current
portion |
|
1,966.2 |
|
|
|
2,022.8 |
|
|
|
2,026.0 |
|
Less: Debt issuance costs |
|
(38.1 |
) |
|
|
(42.4 |
) |
|
|
(45.4 |
) |
Total Debt |
|
2,019.8 |
|
|
|
2,079.2 |
|
|
|
2,131.2 |
|
Less: Cash and cash
equivalents |
|
164.7 |
|
|
|
120.7 |
|
|
|
115.8 |
|
Total Net Debt |
$ |
1,855.1 |
|
|
$ |
1,958.5 |
|
|
$ |
2,015.4 |
|
Contacts: Sean
Choksisean.choksi@advantagesolutions.net
Advantage Solutions (NASDAQ:ADV)
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