ADV - Earnings call transcript Q3 2024 | Advantage Solutions Inc.

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Operator

Greetings and welcome to the Advantage Solutions Third Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Ruben Mella, Vice President of Investor Relations. Thank you, Ruben, you may begin.

Ruben Mella

Thank you, operator. Welcome to Advantage Solutions third quarter earnings conference call. Officer; Vice Chief M&A President the today. Executive Sean Officer; are Chief call Senior Choksi, of Peacock, Chris Financial Growe, and on Dave Strategy and we provide session. question-and-answer remarks, Dave for their Chris the call will after and which will open a prepared

securities annual management current to as required federal statements company to today expectations any that assumptions, factors. and company's your report These will focus this SEC. and except of The including the measures. call, within qualified update are forward-looking meaning certain the XX-K based not statements, financial want outcomes more and law. We materially actual remarks those differ several uncertainties by All predict. attention that with important make involve that undertake note may any During such statements It to difficult statements the are or forward-looking are fact does in non-GAAP the could on revise duty the forward-looking in described laws. management's draw to is Form filed fully to by expressly to their on on risk, entirety our results due factors,

issued non-GAAP most Investor is Relations release provides earnings available of company's the a be to on measure. being comparable recording This website. today and these Our reconciliation webcast financial a GAAP earlier the measures call will also

found can IR the the refer website. prepared which a and be in During Presentation remarks, will of we Events presentation section the to

turn over Dave As today like operations. And results I will call discussed a be to the to continuing unless now, financial reminder, from would Peacock. stated, otherwise the

David Peacock

joining and us. everyone, Thanks, Ruben, morning, and thank you good for

the making and we on quarter our results year, expanding are transformation relationships we and the morning the will our on center outlook Our clients, discussion with how journey. this progress are third for

partly X% merchandising Branded Services to $XXX Services with from to delivering costs, an remain and challenging and the $XXX of healthy tools year-over-year to of adjusted approximately resulting clients consumer X% Services, results. In are our and year. Experiential drove revenues new quarter with excluding and performance, European the conditions. regardless the sales effectiveness. Advantage of leveraging pass-through at help committed while Retailer unique JV and in benefit enhance million. the A On their profitable impacts retail, mix and squarely increase the insights, quarter. a clients for is fourth of adjusted increased organic continue for costs delivered navigate we market intersection to timing connectivity growth. EBITDA results positioned sales revenue third the to of environment We the capabilities, increased We and a EBITDA and our and pleased guidance brands in managing our to basis, our diverse our technology deconsolidation million,

analytics Our who client scale speed, teammates over for to greater XXX,XXX regardless than economic circumstances. enhancing are for more effect of creates retail the serve initiatives, our differentiating in we and agility, XX,XXX services cost our growth precision through further while that managing nationwide critical fuel transformation and solutions retailers. Through brands technology network locations dedicated a and effectiveness

with rate are outcomes and of our years have over for XX confident performance more We increase our of than strong client XX% the base. have this The operating and drive time. X,XXX them will resilience been a for better retention on largest average, us,

and services our adding adjacent core with existing Services. We market expanding new expanding service clients with our full by channels. Starting clients. suite expand services core we both roster with client with During Retailer market across Advantage's did better also growth aim offerings We into clients segments offerings. profit and and improve with to new to into our and while grow and categories to the continued quarter, labor adjacent existing utilize this of our margins

through During core with to life. In the the North experience we grocer's of build-out remodels expanded services new X Trade building fixtures the to services its services also store adjacent built in been small in-store Canada. construction the last by store adding the interior offering have where capabilities months, store opened physical first trade providing store City. shopping The including bring this providing team first year and and to expansion by merchandising footprint represents physical national quarter, our an chain American grocery locations our a helped we our we team. grocer's in XX at format York which expand New services

market growing the an channels enhance signed very agreement enjoy our share chain national expanding value, like relative convenience grocery a We private services also a C-stores, market brand growth. We recently high stores. with we are of and to where faster beyond into mass

set relationship Our our our optimizing private work what reducing to include services operational best-in-class program. they confident in ability and stock, the will further to on We're stage moving will a costs, their develop brand this initial of developing which forward. scope deliver

Experiential to Turning Services.

is to against enhance for continue fixed which efficiencies. and cover in-store drive growing goal Our demand our costs to helps execution events

creative are store for Furthermore, on drive low-labor kit sampling and we fragrance as major to utilize agreement the sampling to continue department support their market the strategy them with shopping. We consumers for production efforts online an team enable with brick-and-mortar with signed These upcoming spring. fragrance solutions growing stores. We for comes collaborating our attractive are which an holiday and a online shopping launch direct-to-home recently also traffic a for season. in margin a and to a high

our category by headquarter challenges. to Lastly, sales the and company one of existing to e-commerce, Branded in We several order-to-cash. adding the and accelerate channel, solve goals Services energy convenience is their a better-for-you our beverage in clients startup expanded with services including relationship with cross-selling

within marketing where of services Branded capabilities across to our collaborating days, Another interconnected in all selling opportunity we and headquarter beauty but more X opportunities to are Canada. and our we capabilities business in with Services supporting sales the It's was with company Amazon a segments. their business them from our more discovering cross-sell on expanded early and

Turning to our on an transformation. update

We to the financial and simplify significant have taken streamline actions processes, business, improve discipline.

This we competitive headquarter our where advantages support areas retail in clients and a other includes of to rooted customers. is that selling, like win. core and to have right on provide we merchandising, areas in sampling, our progress focusing strengthening Our

technology a modernizing strategic and enhance productivity. are collaborations while to to We market. forming us nimble clients scale addressing and our serve in allows This being changing

and and is We our are our simplifying support offerings approach marketing transformation unifying and our cross-selling, improving to generation, operating lead clarifying efficiency. to upselling. Core further

ultimately a support IT AI upgraded to to a analytics time Tata in IT our making are strategy. To utilization company-wide support migration have initiatives We such we cloud, on data our full and of ERP the to investing for modernizing enhanced and cybersecurity, to progress replacement, systems as applicable date, use tools where through costs. serve clients, the several teammates and Consultancy saving frontline Services lake

with leveraging We procurement IBM savings in the maintaining areas expertise are the opportunities, biggest to outsource vendor while their quality. with partnering

We growth established drive up and and to intelligence, opportunities. retailers free with Branded Retailer recognition, and are teams tools and efficiencies, collaborating with time help image efforts proprietary emerging like shelf-level equip but planogram Services on technology modern not only companies capitalize brands also to These our technology.

unique vantage position market us point on give tools Our and a the industry. tech

to retailer, multiple levels performance aisle, at down shelf. and have location, We access the insights to

our relationships, and a teams view comprehensive can with and the scale including faster to data-driven promotions. cannot. like and translate pricing, With of of strategies Our distribution, insights the real-time impact competitive ways reach those visualize tools BI models share into we market, at action Power in

analysis routing and HR large of We contract in workflow, sets. sales are tools, management, actively prioritizing merchandisers, AI use cases data

applications are a third-party at a also potential and adoption. faster larger vendors and platforms and scale We exploring provide AI rate of partnerships to

area for experience. shopping our Another digital of the transformation focus is

X offer clients scalable omnichannel elevating and solutions that targeted the are dots scale. and We create segments omnichannel connect across our capabilities for at value retailers to all

conversion tools working is to great workforce We the at with to CPGs their technology in are that signage those as This consumer activity a break where are like of with on changes the the promos consumer we clients help and they at closely bridge is brands shelf meet drive in retailers to the partnering decision can drive execute opportunity point needs with online the leaders sale. To with behavior. and conclude, at in meaningful that physically providing and address reach us are scale, traffic made a for our consumers. stores placing to firms ground through to the

on Chris stated our hard that, work. With against We this will drive most can testament on over provide financial our guidance now doing the the call consistent insights results we the remain for and to teammates' for to technologies are a focusing processes is previously his our which pass year, I into performance. to deliver track where by and our where We differentiated transformation. we improved enabled by through capabilities

Christopher Growe

you, to of call Thank today. Dave, welcome joining and you all the

pass-through discuss third tight of the of European in costs reminder, and the segments excluding in quarter, consistent our Services Experiential a a our results Retailer performance As and featuring and costs. will I delivered control deconsolidation the our favorable performance JV. We

from of the environment Retailer impacted have for companies seasonality Branded Services, and to of to the and increase sequentially solid. Revenues the million. some fourth to of The weaker Services activities While benefiting the we did CPG client activity performance performance, quarter, for shift due retailers orders. did $XXX X% revenue a Experiential underlying quarter in was third timing the the business declined the although

Retailer driven X% driven as day million. decline and improvement adjusted to activity continued management cost for demand Adjusted services. but an grew to in These merchandising for Services in increased revenues $XX execution for our Our X% favorable $XXX EBITDA XX%. Revenues EBITDA per events increased to $XX increased results results were by strong Services demonstrated client efforts, in to million. Experiential million, a services XX% increased by by year-over-year overall million. $XXX XX% by resulted

efficient EBITDA management an costs overall $XX on in XX% focus to talent of Our increase drove adjusted regarding deployment execution million. and

sheet. to Moving our balance

During at of approximately and we repurchased loan notes term $XX discounts. million attractive the quarter, voluntarily debt

debt debt million, outstanding September of approximately expect $XXX $X from with million full rates. $X.X total Because term pricing, be of loan XX% was debt million funded reduction year to we reduced our nearly lower billion, at hedged a our interest $XXX interest prior or the of guidance. fixed to XX, and expense As

leverage ratio, Xx operations, approximately adjusted including discontinued was net Our EBITDA.

to During million advantage what of is we used the take and employee $XX shares stock incentive-related price X.X million repurchase cash believe to undervalued an we dilution. to quarter, approximately offset of

optimize timing the of and projects assess to continue to our scope transformation spending. We

As a first expenditures year's million. $XX total X result, the approximately months capital were through

flow operations. working better through the capital adjusted EBITDA, discontinued conversion to third quarter, end trend, free range. We of to the million Given lower end the unlevered around million the current guidance the approximately adjusted in cash and The in of cash XX% management of $XX drivers favorable $XX CapEx. $XX DSOs reduction for included million year inclusive in the spending or we expect of a generated lower-than-planned

a have line adjusted revenue operations. We end and low single-digit year to EBITDA sight with clear from of growth continuing the

ended Dave. continue minimal to expect We the $XXX the to this the organizational including expect back will a quarter, cash maintain quarter XXXX. Thank the it operations. We earlier. We time. fourth third the your to due approximately EBITDA of flow transform cash. cash shift in turn I unlevered of adjusted the business increase over range, the and end to Because XX% timing XX% to quarter now to year-over-year generate investments cash of to mentioned to free upper we towards million expectations in adjusted changes our conversion excess for our have you the similar with for I year, partly needs, discontinued

David Peacock

Chris. Thanks,

dedicated XX,XXX Our long-term our success from and passionate will teammates. come

advance their enhance they for clients. We a our do partner will the the efforts to initiatives consumer and on our shifting the a meeting behavior. At of remain on continue for leveraging We staying grateful as our that same more plan the year unified full are about our potential. time, for delivering company, navigate needs operating optimistic focused capabilities clients our as to we strategic as

Operator? We questions. will now take your

Operator

We question will Saini from our first take with Pallav Canaccord. Instructions] [Operator

Pallav Saini

sentiment Maybe your next on the shed change quarter? macro, the first to are light about on maybe year. one in relative there clients segment some you Any thinking can last in how David, Branded the

David Peacock

Thanks question. the for

XXXX. we're not think, any obviously for providing guidance I

little seen you've consumer tougher probably clearly, macro think, average. on environment I on a the

store. with imagine little bag can work you because we we clients, a our just of the cross about a As bit in every mixed it's category

different so kind are whether they're experiencing brand. a of or brand value And realities, different a categories premium

gives relative said, slight among space. then, private national growth there's brand people see to some units first more And And think as create I you space to data of said, the would recent being broadly different more continuing a space. optimistic the probably being an kind anticipated. the optimistic broadly. optimism realities growth in quarter across are GDP more recovery to I flat You're 'XX label categories. That of resilient decline that third you get the the in into But 'XX, in consumer consumer to of that say the came that on kind different out like the economic is of half a full little may consumer. into view cautiously than little as still maybe of a get people But relative I a in that

Pallav Saini

on Is say point? see levels? Any that there it solid color. at good thoughts to And your is there. to is And great it's Experiential, line outperforming expectations there? or you That's would the performing the activity the back it in pre-pandemic growth this with

David Peacock

they which service. helping as serving been some recovery know to per I'd really, the combination. to what business such obviously expected spoke pre-pandemic. The they're performing That's I'd that they're key going for of, about. so year. volume a into strong larger really we room in been with execution. in of Yes, cases for we're sort are recovery, sequential It's a really phase. where has the There within demand driver bit Chris a who call what little of -- had There's say events But that indicators still but business fixed our that certain right, the recovery They of in outperforming is I and within clients of it's really and largely costs day, back into service. some that growth ahead for this key the and a recovery past cover clients moving clients,

Christopher Growe

I'll that. just add quick point to one

not said, that, with but we're towards see growing. still progress to per are we making definitely and as intend events Experiential, XXXX back For continue that level, good day that to Dave to

planning a QX little you also little a on mean, bit do bit segment little and QX. from those effect I time-to-time. events, We bit your and a pull talked about shift by for forward, of of a from all can

of there's seeing leverage And as business. the good the that, So underneath a we of the rebuild really a as just on little element And in in of then Dave said, that. bit sort events. performance business you're that

Pallav Saini

one that last thanks year? you're the from Great, color, on Dave. just and what any and the Chris And seeing for wage the expectations us, for rest your on front the update of

David Peacock

that inflated little say coming it's -- still call above, is slack in I'd growth labor norms, level. little historic wage I'd Yes, a market. that the a wages what more but are back there's to

if existing I prepared get have getting hours our is think for may better. teammates routing talked labor. us, our in hires to down if more kind focus, less result an task assignments you a frankly, We and for it will. our manage we but on That hours of but we better utilization remarks, road, opportunity in of our just ultimately little about our worked, the more

demanded hours we closely. have So And a hours business one we the managing pretty growing the labor labor track because have can more that means do if we're we're efficiently. thing labor our our I But that our for in properly, business. utilize we more change anticipate we is don't services,

Operator

Our next Stanley. from question Greg Morgan comes with Parrish

Gregory Parrish

all, there result. maybe been business Congrats higher could I few And do impact now the competition comment together. level, over guess, a on from have competitors at you it's impact you think months came if on since the if in can from your standpoint? X seen I market time, on a that? a any guess, be you

David Peacock

do of provide I companies, a go businesses that, I'm At period specific right their speculate anything I thanks, they're can guidance that going The lot obviously I wouldn't impact. but Yes, sure won't for say now, what there's Greg. this through consumer to a integration any of you. like products would of say transaction lot closed. XXXX, point, have or and

we're does of to not specific combination an opportunity? But as anything That's within provide a now. So byproduct the that anybody's business seeing right that speculation.

Gregory Parrish

Maybe about as can last in being to in Okay, hear you in it question labor so little I you great that maybe you've on on as pricing, labor was that right, labor, slack the between talked could guess And you're market. it pricing a that talk Or here and the and a spread sort more and past, the do there now other think you near do spread Maybe equilibrium? be where where bit. of persists, today? out exits? think that's little just tight is that if client enough pricing, aggressive flesh

David Peacock

business that so you us. labor the inflation per standpoint that productivity we're that's just a mitigate as it are of possible, so and is as for that of part a efficiently justifies labor are we an Yes, more a we lot I we price, achieve of pricing can to different the day, understanding making as wage driving we're well, some to if things we're a ROI, getting with last, clients has in inflation not call value mean, able I continue you wage up experienced actions the the are I'd managing make the and bit, take, a fair from think and about focus for we and to end we mean, and do leveraging clients as calls closer help are also there you and of we as wage say to near-term, inflation, an the well, a equilibrium may come have pricing. I but wage with environment areas that was our look over and moderates frankly, of more. the hour that our service the and years, this past ROI We've cost to all it number that that, talked within it again, customers, back, of if and success, our X at not ways, inflation in the that of can sure with because can provide one but

Christopher Growe

Greg, mix of benefit the of of like our year-to-date in of of labor-heavy so ultimate whether of just X look but Retail I good businesses, again, our if hours, labor hours, margin trying this I we're just the I job this, not that. might the and a a that of management you doing backwards, businesses. your management we're environment we're indication necessarily pretty to just This it's think the perform gets then good add or to at those well, in, that and point, our overall, period, think quarter pricing from Dave's managing that's Experiential, pricing, looking sort manage labor

Gregory Parrish

And then maybe rise the here. about on talk lastly, maybe promotions,

You've talked but about across flesh again, with out some this the business, and the puts in helpful. as I think maybe well, and the new segment reporting, past be takes might of it the

Just the net what's that impact of of tailwind, that a and of business? sort kind across if and promotions, the impact potentially net the rises, is

David Peacock

revenue on commission, display, deal. Yes, to is in saw We consumer we've volume drive those because percent sold our volume on we in of typically one, products our it more volume merchandising it bit, unit above. The data results really volume. the business, at seen in behalf promotions saw from in you we're work companies. beneficial teams on bit, been of the about we recede market in Unit it's realize through should close at moved around the increase, not it's more realized unit is I'd retail the if marketplace, and a levels, to environment, fluctuating if is the how activities pre-pandemic have think flow a And some broadly of of bit tied a through are do do. while retail if we we've and think periods I promotion little look latest kind the we're there, we're there

at build promotion has during consistent So dramatically a we're to on a pandemic, generally margin, sort market and the it's time pretty the dropped I positive level with took Obviously, been pre-pandemic. number if that's where the of think that some back.

Operator

comes question next Alwy Deutsche Bank. with Faiza from Our

Faiza Alwy

of little that you mentioned. I about bit impact the more timing to a Yes. wanted just ask

the a I much quantify us think and more help that quarter helped by? you you an give Can maybe just and said Experiential Retailer. how color bit us

Christopher Growe

good I it think to of you just to -- a an we're I tell year bit anticipated. there's that well and a is question going in your plan and Faiza, our earlier Yes, you work said I that element a closely to never right example. done, I'll that, work that's and customers that, but expectations that perfectly what month, can get as are clients, it your you plan it try all with based and you an call based your model on project you the that response on

So QX. better be the on the a in than is, what you what quarter, then a and bit in I due we QX a third just around benefit, to just timing. little is, did growth, we you activity. to more QX Experiential tell explicit little tried a tell would especially for Retailer that was growth for And have QX little line I'd expectations of with

little quarter, quantifying give that So how and may a shift of from bit good you think that. some perspective but to it a QX to on about QX

Faiza Alwy

these opportunities, -- on would then sort for Okay, new it's is you're you think the just seen I'm growth expanding highlighting the to the initiatives? and impact history. understood. when you do positive thank this out overall if relative of something that business of how putting these significant of new you've some like, business we'll characterize how And sales to that or historically. And I curious -- you it's I'm services. trying slide to are, you see the figure something start

David Peacock

kind to know, ] that of growth. are [ strategy of earlier it's more the Faiza. say to of part I Yes, some a these a great expose company question, within I'd cedes the

but we other we instance, to the these label now, side, expose just business channels. growth areas, to the into expand have for recognize is need that as well when business private label more So mentioned we right we generally, doing private

some so And stages. early that's

provide great our and especially of everybody and value great and we're benefit for the to in cross-selling clients. the they for clients unit services can expanding of CPG services growth, Some -- and -- the existing doing other bring area consumer this, challenging market, we when knows things a

varying new not XXXX, have relative a within seeing very business, our to think, going development teams. now. business level of in degrees for activity anything overall we're impact and activity on of to business we're I I'm forecast size or so but pleased And the the the to with right we business lot And highlight

Faiza Alwy

declined then little were overall And was Services, but one, top-line bit, last margins better. a just Branded I know

curious what that. I'm led mix So it labor to talking would you've be color know I or about any helpful. or that was other there whether been efficiency,

David Peacock

I vertical. Yes, mean, that the side labor that efficiency in more within think I falls

We how of even we really been to have focused personnel at sector we AI -- that more on and labor in work. And helped leveraging and division process the combination more and think standpoint. in be has overall, drive efficiency on do of Branded Services then technology efficient a in we across being us do, I in buzzword the deploy a of risk just the using how in direct some consistent how space we what from kind

to growth. that's that contributed what's margin So

Operator

the closing at turn for this back want questions I call to no further are Dave over time. comments. there And to Peacock

David Peacock

thank Thank finishing you. Well, joining the strong. next you appreciate everybody had we to we look to hopefully look appreciate quarter. and quarter We you. forward about We talking to We're excited the attentionn year and everybody's forward the call.

Operator

And this teleconference. concludes today's

Thank participation. disconnect lines may time. for You you this your at your

Advantage Solutions (ADV) 7 Nov 242024 Q3 Earnings call transcript