UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 – Results of Operations and Financial Condition
On November 9, 2021, Advantage Solutions Inc. (the “Company”) issued a press release announcing its financial results for the three months ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
On November 9, 2021, at 5:00 p.m. ET, the Company will host a conference call announcing its financial results for the three months ended September 30, 2021. A copy of management’s earnings presentation materials is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference herein. The presentation will be accessible, live via audio broadcast, through a link posted on the Investor Relations section of the Company’s website at https://ir.advantagesolutions.net. This presentation will be available for audio replay for one week following the call.
The Company makes reference to non-GAAP financial information in the press release and earnings presentation materials. The Company’s non-GAAP financial measures should be viewed in addition to and not as a substitute for or superior to the Company’s reported results prepared in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the nearest comparable GAAP financial measures are contained in the data tables at the end of the press release and earnings presentation materials.
Item 7.01 Regulation FD Disclosure
The information set forth under Item 2.02 is incorporated by reference into this Item 7.01.
The information being furnished pursuant to Item 2.02 and Item 7.01 of this Current Report on Form 8-K, including the accompanying Exhibits 99.1 and 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
On November 9, 2021, the Company announced that the Board of Directors authorized a new share repurchase program (the “2021 Share Repurchase Program”), pursuant to which the Company may repurchase up to $100 million of the Company’s Class A common stock. The 2021 Share Repurchase Program does not have an expiration date, but provides for suspension or discontinuation at any time. The 2021 Share Repurchase Program permits the repurchase of our Class A common stock on the open market and in other means from time to time. The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and the Company is under no obligation to repurchase any specific number of shares.
A copy of the press release announcing the 2021 Share Repurchase Program is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated by reference herein.
Cautionary Note Regarding Forward-Looking Statements
The press releases and earnings presentation attached as exhibits in this Current Report on Form 8-K include information that may be considered forward-looking statements within the meaning of the federal securities laws, including statements regarding the expected future performance of the Company’s business. Forward-looking statements generally relate to future events or the Company’s future financial or operating performance. These forward-looking statements generally are identified by the words “may,” “should,” “expect,” “intend,” “will,” “would,” “estimate,” “anticipate,” “believe,” “predict,” “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.
Detailed risk factors affecting the Company are set forth in the section titled “Risk Factors” in the Annual Report on Form 10-K/A filed by the Company with the Securities and Exchange Commission (the “SEC”) on May 17, 2021 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 the Company 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.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
|
Exhibit No. |
Description | |
| 99.1 | Press Release issued by Advantage Solutions Inc., dated November 9, 2021 regarding results for three months ended September 30, 2021. | |
| 99.2 | Management’s Earnings Presentation for Advantage Solutions Inc., dated November 9, 2021. | |
| 99.3 | Press Release issued by Advantage Solutions Inc., dated November 9, 2021 regarding share repurchase program. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: November 9, 2021
ADVANTAGE SOLUTIONS INC.
By: /s/ Brian Stevens
Brian Stevens
Chief Financial Officer and
Chief Operating Officer
FOR IMMEDIATE RELEASE
Advantage Solutions Reports
Healthy Third Quarter 2021 Financial Results and Affirms 2021 Outlook
Irvine, Calif, November 9, 2021 – Advantage Solutions Inc. (NASDAQ: ADV) (“Advantage,” the “Company,” “we” or “our”), the leading provider of outsourced sales and marketing services to consumer goods manufacturers and retailers, today reported financial results for its fiscal third quarter ended September 30, 2021.
“We are pleased with how our team navigated the third quarter,” said Tanya Domier, Chief Executive Officer of Advantage. “At-home consumer demand remains elevated – supported by steady volume and rising prices. Our higher growth, higher margin digital services continue to outperform. And we are investing and will continue to invest to stand up critical services for brands and retailers,” Domier commented. “While the operating environment remains dynamic during the pandemic, we’re confident in delivering against FY 2021 Adjusted EBITDA guidance of $520 to $530 million. Demand for our essential services remains high as we help our partners navigate through unprecedented change – in both brick-and-mortar and e-commerce. And we’ve been disciplined in realizing price to offset wage inflation in our most labor intensive services.”
“Importantly, I’d like to again thank our associates. They’re providing essential, high ROI services to consumer goods companies and retailers – helping to lead our clients and communities out of this pandemic better, cheaper and faster,” Domier added.
Third Quarter 2021 Highlights
| · | Revenues were $928.8 million for the third quarter of 2021, representing an increase of $144.4 million, or 18.4%, from the third quarter of 2020 revenues of $784.3 million. |
| · | Operating income was $65.6 million for the third quarter of 2021, representing a decline of $23.0 million, or 26.0%, from the third quarter of 2020 operating income of $88.6 million. |
| · | Net income was $24.3 million for the third quarter of 2021, representing a decline of $12.4 million, or 33.8%, from the third quarter of 2020 net income of $36.7 million. |
| · | Adjusted EBITDA was $133.8 million for the third quarter of 2021, representing a decline of $2.5 million, or 1.8%, from the third quarter of 2020 Adjusted EBITDA of $136.3 million. |
The year-over-year increase in revenues was driven by $89.3 million of growth in the marketing segment (an increase of 37% year-over-year), and $55.1 million of growth in the sales segment (an increase of 10% year-over-year). Third quarter growth in the marketing segment was driven by continued sequential recovery in product demonstration and sampling and sustained outperformance in our digital businesses. Third quarter growth in the sales segment was driven by continued growth in our retailer merchandising services and a rebound in international.
The year-over-year decline in operating income was driven primarily by a difficult comparison given a favorable settlement of lease liability obligations associated with real estate realignment initiatives in 2020 and a non-cash change in fair value adjustments related to contingent consideration.
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The year-over-year decline in net income was driven primarily by lower operating income, partially offset by lower year-on-year interest expense and a fair value adjustment to warrant liability.
The year-over-year decline in Adjusted EBITDA was driven primarily by investments to stand up tens of thousands of associates in two areas – the fast-growing retail merchandising operation, and the sampling and demonstration business that’s coming back to life post-COVID. Adjusted EBITDA was also impacted by expected volume normalization in headquarter sales services and by the roll-off of ancillary COVID-related services that aided EBITDA in the prior year.
Balance Sheet Highlights
As of September 30, 2021, the Company’s cash and cash equivalents was $168.0 million, total debt was $2,039.0 million and Net Debt was $1,925.0 million. The debt capitalization consists primarily of a $1,315.1 million First Lien Term Loan facility, $775 million of senior secured notes and a $400 million revolving credit facility, under which no balance was outstanding as of September 30, 2021.
Subsequent Events
On October 28, 2021, Advantage successfully repriced its $1,315 million First Lien Term Loan facility. The spread on its floating rate term loan was reduced by 75 basis points from Libor + 5.25% to Libor + 4.50%. The facility remains subject to the 0.75% Libor floor. The effective rate on this facility at the floor was reduced from 6.00% to 5.25%, and yields a projected interest savings of $10 million, or $7 million after tax.
On November 9, 2021, Advantage announced that its Board of Directors had approved and authorized an open-ended share repurchase program up to $100 million. This program will allow Advantage to be opportunistic in allocating capital to share repurchase. Advantage CEO Tanya Domier noted, “As long-term stewards and owners, we are excited to have the flexibility to invest opportunistically in the asset we know best – our own stock.”
COVID-19 Update
Advantage continues to monitor the impact of the COVID-19 pandemic on its business and remains focused on: ensuring its ability to safeguard the health of its employees, maintaining high service levels for brand and retailer clients so that essential products are available to consumers in-store and online, and preserving financial liquidity to mitigate the uncertainty caused by the pandemic.
While at-home demand volumes remain elevated versus pre-pandemic levels, they are normalizing. Price trends are accelerating on shelf though, offsetting some of the volume normalization.
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The COVID-19 pandemic continues to be a temporary headwind in the marketing segment. The Company’s in-store sampling business, the largest category in the marketing segment, continues to recover from activity restrictions implemented in partnership with retailer clients in order to protect the health and safety of associates and consumers during the pandemic. In-store sampling event activity resumed in a safe and limited manner in the third quarter of 2020 and has continued its measured recovery throughout the third quarter of 2021. Event counts in the third quarter of 2021 were up 13% sequentially from the second quarter of 2021.
The Company expects the COVID-19 pandemic will continue to impact its various businesses into the first half of 2022. This is based on the belief that global supply chain disruptions, the uncertain path of the Delta variant and variable rates of vaccination will impact the recovery path from here.
FY 2021 Outlook
While the range of fundamental outcomes remains wider than normal, our Company’s solid year-to-date performance gives us confidence in affirming our full year Adjusted EBITDA guidance of $520 million to $530 million. Our forecasted Adjusted EBITDA assumes that elevated at-home demand for consumer goods normalizes a bit more in the fourth quarter of 2021, that weakness in the marketing segment from COVID-related headwinds eases further into the holidays, that solid pricing for wage inflation flows through in our most labor-intensive businesses and that the costs to recruit, train and retain large teams of new associates post-pandemic remains elevated.
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Conference Call Details
Advantage will host a conference call at 5:00 p.m. ET on November 9, 2021 to discuss its third quarter financial performance and business outlook. To participate, please dial (844) 825-9789 within the United States or (412) 317-5180 outside the United States approximately 10 minutes before the scheduled start of the call. The conference ID for the call is 10161125. The conference call will also be accessible, live via audio broadcast, on the Investor Relations section of the Advantage website at https://ir.advantagesolutions.net/
A replay of the conference call will be available online at https://ir.advantagesolutions.net/. 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 (412) 317-6671 outside the United States. The replay ID is 10161125.
About Advantage Solutions
Advantage Solutions is the leading provider of outsourced sales and marketing solutions to consumer goods companies and retailers. We have a strong platform of technology-enabled, competitively advantaged services like headquarter sales, retail merchandising, in-store sampling, digital commerce and omnichannel marketing. For brands and retailers of all sizes, we help get the right products on the shelf, whether physical or digital, and into the hands of consumers, however 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 it services the global needs of multinational, regional and local manufacturers. For more information, please visit advantagesolutions.net.
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. 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”, “estimate”, “anticipate”, “believe”, “predict”, “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.
Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the COVID-19 pandemic and the measures taken in response thereto; the availability, acceptance, administration and effectiveness of any COVID-19 vaccine; changes to labor laws or wage or job classification regulations, including minimum wage, or other market-driven wage changes; 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 effectively remediate material weaknesses and maintain proper and effective internal controls 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/A filed by the Company with the Securities and Exchange Commission (the “SEC”) on May 17, 2021 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.
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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 EBITDA for economic interests in investments, Adjusted EBITDA and Net Debt. These are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the 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 in and in comparing the 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 income before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Karman Topco L.P. and Advantage’s private equity sponsors’ management fee, (vii) change in fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net of benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation expenses, (xv) (Recovery from) loss on 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.
This press release also includes certain estimates and projections of Adjusted EBITDA, including with respect to expected 2021 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.
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Reconciliation of GAAP to Non-GAAP Historical Financial Measures
Results of Operations for the Three Months Ended September 30, 2021 and 2020
| Three Months Ended September 30, | |||||||||||||||||
| (amounts in thousands) | 2021 | 2020 | |||||||||||||||
| Revenues | $ | 928,760 | 100.0 | % | $ | 784,345 | 100.0 | % | |||||||||
| Cost of revenues | 766,253 | 82.5 | % | 625,363 | 79.7 | % | |||||||||||
| Selling, general, and administrative expenses | 37,742 | 4.1 | % | 11,855 | 1.5 | % | |||||||||||
| Depreciation and amortization | 59,163 | 6.4 | % | 58,556 | 7.5 | % | |||||||||||
| Total expenses | 863,158 | 92.9 | % | 695,774 | 88.7 | % | |||||||||||
| Operating income | 65,602 | 7.1 | % | 88,571 | 11.3 | % | |||||||||||
| Other (income) expenses: | |||||||||||||||||
| Change in fair value of warrant liability | (3,491 | ) | (0.4 | )% | — | 0.0 | % | ||||||||||
| Interest expense, net | 36,490 | 3.9 | % | 48,243 | 6.2 | % | |||||||||||
| Total other expenses | 32,999 | 3.6 | % | 48,243 | 6.2 | % | |||||||||||
| Income before income taxes | 32,603 | 3.5 | % | 40,328 | 5.1 | % | |||||||||||
| Provision for income taxes | 8,276 | 0.9 | % | 3,623 | 0.5 | % | |||||||||||
| Net income | $ | 24,327 | 2.6 | % | $ | 36,705 | 4.7 | % | |||||||||
| Other Financial Data | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 133,756 | 14.4 | % | $ | 136,253 | 17.4 | % | |||||||||
| (1) | We present Adjusted EBITDA because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period. Adjusted EBITDA should not be considered as an alternative for net income, our most directly comparable measure presented on a GAAP basis. |
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A reconciliation of net income to Adjusted EBITDA is provided in the following table:
| Three Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| (in thousands) | ||||||||
| Net income | $ | 24,327 | $ | 36,705 | ||||
| Add: | ||||||||
| Interest expense, net | 36,490 | 48,243 | ||||||
| Provision for income taxes | 8,276 | 3,623 | ||||||
| Depreciation and amortization | 59,163 | 58,556 | ||||||
| Equity based compensation of Topco and Advantage Sponsors’ management fee(a) | (5,575 | ) | 1,468 | |||||
| Change in fair value of warrant liability | (3,491 | ) | — | |||||
| Stock based compensation expense(b) | 7,854 | — | ||||||
| Fair value adjustments related to contingent consideration related to acquisitions(c) | 3,221 | (6,184 | ) | |||||
| Acquisition-related expenses(d) | 5,110 | 3,683 | ||||||
| EBITDA for economic interests in investments(i) | (3,620 | ) | (2,005 | ) | ||||
| Restructuring expenses(e) | (394 | ) | (7,635 | ) | ||||
| Litigation expenses(f) | (92 | ) | (31 | ) | ||||
| Costs associated with COVID-19, net of benefits received(g) | 1,087 | (1,389 | ) | |||||
| Costs associated with the Take 5 Matter(h) | 1,400 | 1,219 | ||||||
| Adjusted EBITDA | $ | 133,756 | $ | 136,253 | ||||
| (a) | Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (or certain of the management companies associated with it or its advisors) pursuant to a management services agreement in the three and nine months ended September 30, 2021 and 2020. Also represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors, (ii) equity-based compensation expense associated with the Common Series C Units of Topco as a result of the Transactions, (iii) compensation amounts associated with the Company’s Management Incentive Plan originally scheduled for potential payment March 2022 that were accelerated and terminated as part of the Transactions, and (iv) compensation amounts associated with the anniversary payments to Tanya Domier. Certain of Ms. Domier’s anniversary payments were accelerated as part of the Transactions. |
| (b) | Represents non-cash compensation expense related to issuance of performance restricted stock units, restricted stock units, stock options, employee stock purchase plan under the Advantage Solutions Inc. 2020 Incentive Award Plan and shares of our Class A common stock pursuant to the Advantage Solutions Inc. 2020 Employee Stock Purchase Plan. |
| (c) | Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the applicable periods. |
| (d) | Represents fees and costs associated with activities related to our acquisitions and restructuring activities related to our equity ownership, including transaction bonuses paid in connection with the Transactions, professional fees, due diligence, public company readiness and integration activities. |
| (e) | Represents fees and costs associated with various internal reorganization activities among our consolidated entities. |
| (f) | Represents legal settlements that are unusual or infrequent costs associated with our operating activities. |
| (g) | Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief. |
| (h) | Represents costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, for the three and nine months ended September 30, 2021 and 2020, respectively. |
| (i) | 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. |
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A reconciliation of total debt to Net Debt is provided in the following table:
| (in millions) | September 30, 2021 | ||||
| Current portion of long-term debt | $ | 13.4 | |||
| Long-term debt, net of current portion | 2,026.0 | ||||
| Less: Debt issuance costs | (53.6 | ) | |||
| Total Debt | 2,093.0 | ||||
| Less: Cash and cash equivalents | 168.0 | ||||
| Total Net Debt (a) | $ | 1,925.0 | |||
| (a) | We present Net Debt because we believe it 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. |
Contacts:
Dan Riff
Chief Investor Relations & Strategy Officer
Advantage Solutions
Daniel.riff@advantagesolutions.net
Dan Morrison
Senior Vice President, Finance & Operations
Advantage Solutions
Kevin Doherty
Solebury Trout
Managing Director
Investorrelations@advantagesolutions.net
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ADVANTAGE SOLUTIONS INC. Q3 2021 Earnings Presentation November 9, 2021
DISCLAIMER Forward Looking Statements
Certain statements in this presentation or accompanying commentary may be considered forward-looking statements with
the meaning of federal securities laws. Forward-looking statements generally relate to future events or
Advantage’s future financial or operating performance, In some cases, you can identify forward-looking
statements by terminology such as “may”, “should”,
“expect”, “intend”, “will”, “would”, “estimate”,
“anticipate”, “believe”, “predict”, “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 are inherently
uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not
limited to, the COVID-19 pandemic and the measures taken in response thereto; the availability, acceptance, administration
and effectiveness of any COVID-19 vaccine; changes to labor laws or wage or job classification regulations, including
minimum wage, or other market-driven wage changes; 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 effectively remediate material
weaknesses and maintain proper and effective internal controls 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/A filed by Advantage with the Securities and Exchange Commission
(the “SEC”) on May 17, 2021 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 Measure and Related
Information This presentation includes certain financial measures not presented in accordance with generally accepted
accounting principles (“GAAP”) including Adjusted EBITDA and Net Debt. These non-GAAP financial measures
are not measures of financial performance in accordance with GAAP and may exclude items that are significant in
understanding and assessing the Company’s financial results. Therefore, these 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 the Company’s presentation of
these measures may not be comparable to similarly-titled measures used by other companies. The Company believes
these non-GAAP measures of financial results provide useful information to management and investors regarding
certain financial and business trends relating to the Company’s financial condition and results of operations.
The Company 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 in and in comparing the Company’s financial measures with other
similar companies, many of which present similar non-GAAP financial measures to investors. These 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. Adjusted EBITDA means
net income (loss) before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation,
(iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based
compensation of Karman Topco L.P. and Advantage’s private equity sponsors’ management fee, (vii) change in
fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent
consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net of
benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation
expenses, (xv) (Recovery from) loss on 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. The Company has presented the financial data for the last twelve-month (“LTM”)
period ended September 30, 2021 by adding the unaudited results of operations for the nine-month period ended
September 30, 2021 to its audited results of operations for the year ended December 31, 2020 and then subtracting
the unaudited results of operations for the nine-month period ended September 30, 2020. The financial data for the
LTM period ended September 30, 2021 does not comply with GAAP. 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.
1
KEY MESSAGES • Delivered healthy
financial results through the third quarter as reopening continued • Affirming 2021 Adjusted EBITDA guidance of
$520 to $530 million despite a dynamic operating environment • Taking pricing in a majority of our businesses most
impacted by part-time labor wage inflation, with hikes of mid-to-high single digits • Seeing continued steady recovery
in businesses most impacted by COVID, with sampling events up ~13% q/q • Seeing continued elevated at-home consumer
goods demand – supported by steady volume and rising prices • Seeing sustained strength in higher growth/higher
margin digital services • Investing in recruiting and retention to stand up tens of thousands of new
associates – and expecting that to persist • Investing through the P&L in trade promotion optimization and
service innovation • Completing tuck-in acquisitions to add capabilities at attractive returns • Pursuing organic
growth with a robust new business pipeline coming out of the pandemic • Announcing an open-ended share repurchase
program of up to $100 Million
2
Q3 TRENDS Total Advantage Sales Segment Marketing Segment $145 $136 $134 Q3'19A Q3'20A Q3'21A Y/Y growth (2%) $86 $102 $95 Q3'19A Q3'20A Q3'21A (7%) $59 $34 $39 Q3'19A Q3'20A Q3'21A 12% Y/Y growth Y/Y growth $ in millions. Adjusted EBITDA $982 $784 $929 Q3'19A Q3'20A Q3'21A $503 $542 $597 Q3'19A Q3'20A Q3'21A $478 $242 $332 Q3'19A Q3'20A Q3'21A 18% 10% 37% Y/Y growth Y/Y growth Y/Y growth $ in millions. Revenues
Jan Feb Mar Apr May Jun Jul Aug Sep
Oct Nov Dec 2019 Act 2020 Act 2021 Act IMPROVING TRENDS CONTINUE IN Q3 • Strengthening recovery in Marketing
segment − In-store sampling recovering at key retailer partners − Digital & e-commerce strength
continuing with consumer omnichannel shift • Continued strength in Sales segment − Still solid
center-store / at-home volume trends − Concerted push for increased prices, surgical promotions − International
business rebounding nicely − Growth in retail merchandising services − Navigating some mix
headwinds • Investing in recruiting, training and retention as we stand up new and recovering operations
– and pricing with discipline to offset wage inflation • Leveraging automation and technology to drive
productivity and results SAMPLING EVENT COUNT +~13% Q/Q
4
VALUE CREATION ALGORITHM • Operate
with excellence by serving existing clients well and delivering productivity through continuous improvement • Invest
wisely in talent, technology and capability to support clients’ evolving needs through attractive opportunities
for: − Organic reinvestment − Disciplined tuck-in acquisitions • Nurture ‘evolutionary’
culture so that we remain flexible as we build the business to be: − The partner of choice for brands and retailers
as their needs change − Opportunistic when circumstances present us with pitches in our sweet-spot
5
FINANCIAL PERFORMANCE
FINANCIAL SUMMARY Note: Please see the
appendix for a reconciliation of non-GAAP financial measures to most directly comparable GAAP measures. Totals may not
add due to rounding. Q4 Q1 Q2 Q3 ($ in millions) 2020A 2019A % 2021A 2020A % 2021A 2020A % 2021A 2020A % Total Advantage
Revenues $850 $1,013 (16)% $791 $879 (10)% $850 $642 32% $929 $784 18% Adjusted EBITDA 133 144 (8)% 111 106 5% 122 112 9% 134 136 (2)% % margin 15.6% 14.2% 14.1% 12.1% 14.4% 17.5% 14.4% 17.4%
Sales Segment Revenues 550 520 6% 534 508 5% 562 460 22% 597 542 10%
Adjusted EBITDA 90 87 2% 84 79 7% 90 90 (1)% 95 102 (7)% %
margin 16.3% 16.8% 15.7% 15.5% 15.9% 19.6% 15.9% 18.8% Marketing Segment
Revenues 300 493 (39)% 257 372 (31)% 288 181 59% 332 242 37%
Adjusted EBITDA 43 57 (24)% 27 28 (2)% 32 22 47% 39 34 12% %
margin 14.3% 11.5% 10.7% 7.5% 11.3% 12.1% 11.6% 14.2%
7
• Total Debt of $2.1 billion(1) − Leverage at around 3.9x net debt(1) to LTM September Adjusted EBITDA − No meaningful maturities
for the next four+ years • Debt Capitalization: • Equity capitalization @ September 30,
2021: − 318,573,563 Class A Common shares outstanding − 18,578,324 Warrants @ $11.50 exercise − 2,741,424
Performance Restricted Stock Units (“PSUs”)(5) − 3,858,699 Restricted Stock
Units (“RSUs”) − 261,234 Options CAPITALIZATION SUMMARY (1) Includes Other Debt of approximately $3M.
(2) Asset-backed Revolver rate subject to 0.50% LIBOR floor. See ABL Revolving Credit Agreement, dated October 28, 2020
for additional information. (3) First Lien Term Loan rate subject to 0.75% LIBOR floor. See First Lien Credit Agreement,
dated October 28, 2020 and First Lien Amendment dated October 28, 2021. (4) First Lien Term Loan amortizes at 1% per
annum, paid quarterly. Illustratively showing full $1,315 million obligation in 2027E maturity. (5) Represents the number
of underlying shares that would be issued at Target performance levels. (6) On October 28, 2021, the Company successfully
repriced its $1.3B First Lien Term Loan to L + 4.50% (5.25% at the floor) interest rate, resulting in annualized projected
interest savings of approximately $10 million, or $7 million after tax. Asset-backed Revolver 1L Term Loan Sr. Secured
Notes $400 $1,315 $775 2021E … 2025E 2026E 2027E 2028E (4) Maturity Rate Outstanding Asset-backed Revolver
($400M) 2025 L+2.25%(2) -- First Lien Term Loan 2027 L+4.50%(3) (6) 1,315 Senior Secured Notes 2028 6.50% 775 Total
Funded Debt $2,090
8
OUTLOOK Affirming FY2021 Outlook: •
FY 2021 Adjusted EBITDA of $520-530 million • Realizing disciplined pricing to offset wage inflation in labor
intensive services • Investing in recruiting, training and retaining talent in a still-constrained labor
market • Expecting continued post-COVID recovery from here • De-leveraging, taking Net Debt / Adjusted
EBITDA towards 3.0x by the end of 2022 • Supporting promising medium-term opportunities through the P&L
9
THANK YOU
NON-GAAP RECONCILIATION (1/3) Consolidated
Three Months Ended December 31, Three Months Ended March 31, Three Months Ended June 30, Three Months Ended September 30,
2020 2019 2021 2020 2021 2020 2021 2020 Total Company (in thousands) Net income $ (152,238) $ 14,802
$ (546) $ (21,723) $ 5,754 $ (37,814) $ 24,327 $ 36,705 Add:
Interest expense, net 82,486 53,606 30,865 51,794 37,189 51,521 36,490 48,243 Provision for (benefit from)
income taxes 3,383 5,630 1,743 1,367 6,563 (13,704) 8,276 3,623 Depreciation and amortization 61,085 58,149
59,613 60,209 62,674 58,748 59,163 58,556 Equity based compensation of Topco and Advantage Sponsors’ management
fee(1) 88,630 2,894 (2,814) 3,837 (1,642) 4,184 (5,575) 1,468 Change in fair value of warrant liability
13,363 — 5,526 — (7,059) — (3,491) — Stock based compensation expense(2) — —
8,655 — 8,988 — 7,854 — Fair value adjustments related to contingent consideration related to
acquisitions(3) 11,328 (3,156) (1,043) 4,095 3,598 4,128 3,221 (6,184) Acquisition-related expenses(4) 36,750
8,714 5,146 5,529 2,797 4,861 5,110 3,683 EBITDA for economic interests in investments(5) (1,672) (3,329) (1,189)
(1,898) (1,807) (887) (3,620) (2,005) Restructuring expenses(6) (258) 2,112 4,096 1,098 6,934 46,565 (394) (7,635)
Litigation expenses(7) (593) 3,500 (818) 104 — 2,500 (92) (31) Costs associated with COVID-19, net of benefits
received(8) (10,546) — 1,293 1,000 (3,328) (1,019) 1,087 (1,389) Recovery from Take 5 — — —
— — (7,700) — — Costs associated with the Take 5 Matter(9) 809 1,376 901 939 1,310 661
1,400 1,219 Adjusted EBITDA $ 132,527 $ 144,298 $ 111,428 $ 106,351 $ 121,971
$ 112,044 $ 133,756 $ 136,253 Three Months Ended December 31, Three Months Ended March 31,
Three Months Ended June 30, Three Months Ended September 30, 2020 2019 2021 2020 2021 2020 2021 2020 Sales Segment
(in thousands) Operating income $ (32,115) $ 40,288 $ 35,148 $ 24,194 $
44,673 $ 11,021 $ 51,906 $ 60,205 Add: Depreciation and amortization 44,250 40,803
42,564 43,107 44,710 42,234 41,515 41,978 Equity based compensation of Topco and Advantage Sponsors’
management fee(1) 62,989 2,062 (1,838) 3,199 (678) 3,538 (4,844) 1,398 Stock based compensation expense
(2) — — 4,694 — 4,730 — 4,371 — Fair value adjustments related to contingent
consideration related to acquisitions(3) 600 (2,401) 778 4,312 (5,027) 4,128 192 (669) Acquisition-related
expenses(4) 24,904 5,216 3,320 4,156 2,280 4,081 3,899 3,581 EBITDA for economic interests in investments(5)
(2,014) (3,243) (1,487) (2,071) (2,110) (1,338) (3,832) (2,142) Restructuring expenses(6) (2,556) 1,199 780
752 1,176 23,326 1,273 (1,227) Litigation expenses(7) (946) 3,500 (516) 104 — 2,500 (68) — Costs
associated with COVID-19, net of benefits received(8) (5,604) — 633 810 (231) 530 787 (1,198) Sales Segment
Adjusted EBITDA $ 89,508 $ 87,424 $ 84,076 $ 78,563 $ 89,523 $ 90,020
$ 95,199 $ 101,926 Marketing Segment (in thousands) Operating income $ (20,891) $ 33,750
$ 2,440 $ 7,244 $ (2,226) $ (11,018) $ 13,696 $ 28,366 Add:
Depreciation and amortization 16,835 17,346 17,049 17,102 17,964 16,514 17,648 16,578 Equity based compensation
of Topco and Advantage Sponsors’ management fee(1) 25,641 832 (976) 638 (964) 646 (731) 70 Stock based
compensation expense(2) — — 3,961 — 4,258 — 3,483 — Fair value adjustments related
to contingent consideration related to acquisitions(3) 10,728 (755) (1,821) (217) 8,625 — 3,029 (5,515)
Acquisition-related expenses(4) 11,846 3,498 1,826 1,373 517 780 1,211 102 EBITDA for economic interests in
investments(5) 342 (86) 298 173 303 451 212 137 Restructuring expenses(6) 2,298 913 3,316 346 5,758 23,239
(1,667) (6,408) Litigation expenses(7) 353 — (302) — — — (24) (31) Costs associated with COVID-19,
net of benefits received(8) (4,942) — 660 190 (3,097) (1,549) 300 (191) Recovery from Take 5 — —
— — — (7,700) — — Costs associated with the Take 5 Matter(9) 809 1,376 901 939 1,310
661 1,400 1,219 Marketing Segment Adjusted EBITDA $ 43,019 $ 56,874 $ 27,352 $ 27,788
$ 32,448 $ 22,024 $ 38,557 $ 34,327
11
NON-GAAP RECONCILIATION (2/3) (in millions)
September 30, 2021 Current portion of long-term debt $ 13.4 Long-term debt, net of current portion 2,026.0 Less: Debt
issuance costs (53.6) Total Debt 2,093.0 Less: Cash and cash equivalents 168.0 Total Net Debt (12,13) $ 1,925.0
12
NON-GAAP RECONCILIATION (3/3) Note:
Dollars in millions. Numerical figures included in this slide have been subject to rounding adjustments (1) Equity
based compensation of Karman Topco L.P. and Advantage’s private equity sponsors’ management fee. (2)
Represents non-cash compensation expense related to issuance of performance restricted stock units, restricted stock
units, and stock options and ESPP with respect to our Class A common stock under the Advantage Solutions Inc. 2020
Incentive Award Plan. (3) Represents adjustments to the estimated fair value of our contingent consideration liabilities
related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the
applicable periods. (4) Represents fees and costs associated with activities related to our acquisitions and
restructuring activities related to our equity ownership, including professional fees, due diligence, and
integration activities. (5) 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. (6) One-time restructuring activities costs
associated with non-recurring reorganization projects. (7) Represents legal settlements that are unusual or infrequent
costs associated with our operating activities. (8) Represents (a) costs related to implementation of strategies for
workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line
associates, medical benefit payments for furloughed associates, and personal protective equipment and (b) benefits
received from government grants for COVID-19 relief. (9) Represents costs associated with investigation and remediation
activities related to the Take 5 Matter, primarily, professional fees and other related costs. (10) 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. (11) Represents the
amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.
(12) 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. (13) On October 28, 2021, the Company
successfully repriced its $1.3B First Lien Term Loan to L + 4.50% (5.25% at the floor) interest rate, resulting in
annualized projected interest savings of approximately $10 million, or $7 million after tax.
13
Advantage Solutions Announces $100 Million Share Repurchase Authorization
Irvine, CA, November 9, 2021 -- Advantage Solutions Inc. (NASDAQ: ADV) (the “Company” or “Advantage”) today announced that its Board of Directors authorized an open-ended share repurchase program of up to $100 Million of the Company’s Class A common stock. Subject to prevailing market conditions, relevant securities laws and other considerations described further below, the Company intends to repurchase, in the open market or in other means, the Company’s Class A common stock. This share repurchase does not have an expiration date, but provides for suspension or discontinuation at any time.
This program will allow Advantage to be opportunistic in allocating capital to repurchase shares of its Class A common stock when management determines, at its discretion, two conditions are met:
| 1. | Advantage shares are trading at a meaningful discount to the Company’s conservative estimate of intrinsic value; and |
| 2. | the returns from repurchasing shares compare favorably to the Company’s other options for capital deployment, including its expected high return M&A program and debt de-leveraging. |
Advantage CEO Tanya Domier noted, “As long-term stewards and owners, we are excited to have the flexibility to invest opportunistically in the asset we know best – our own stock.” Dan Riff, Chief Investor Relations and Strategy Officer added, “With my investor hat on, I believe ADV’s share price is meaningfully disconnected from our expected healthy free cash flow growth, attractive returns on capital, and solid post-COVID outlook from here.”
About Advantage Solutions
Advantage Solutions is a leading business solutions provider committed to driving growth for consumer goods manufacturers and retailers through winning insights and execution. Advantage’s data and technology-enabled omnichannel solutions — including sales, retail merchandising, business intelligence, digital commerce and a full suite of marketing services — help brands and retailers across a broad range of channels drive consumer demand, increase sales and achieve operating efficiencies. Headquartered in Irvine, California, Advantage has offices throughout North America and strategic investments in select markets throughout Africa, Asia, Australia and Europe through which it services the global needs of multinational, regional and local manufacturers. For more information, please visit advantagesolutions.net.
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 timing, manner, amount, and overall impact of future purchases under the repurchase program, as well statements regarding free cash flow growth, returns on capital and post-COVID outlook. These forward-looking statements generally are identified by the words “may”, “should”, “expect”, “intend”, “will”, “would”, “estimate”, “anticipate”, “believe”, “predict”, “potential” or “continue”, or the negatives of these terms or variations of them or similar terminology. These statements are based on management’s current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements in this press release due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of the Company’s businesses, including the impact of the COVID-19 pandemic and measures taken in response thereto. More detailed information about these factors is contained in the documents the Company has filed with or furnished to the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020.
Statements in this press release speak only as of the date they were made, and the Company undertakes no duty to update or release any revisions to any forward-looking statement made in this press release or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in the Company’s expectations, except as required by law.
Investors:
Dan Riff
Chief Investor Relations & Strategy Officer
Advantage Solutions
daniel.riff@advantagesolutions.net
Media:
Will Minton
Vice President, Corporate Marketing
Advantage Solutions
press@advantagesolutions.net