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Advantage Solutions exceeded 2023 financial guidance with solid fourth-quarter performance and expects continued growth in 2024

  • 2023 consolidated revenues were $4.2 billion, a year-over-year increase of 4.3%, and operating income was $76.2 million. Excluding foreign exchange, acquisitions and divestitures, revenues increased 6.8%, and Adjusted EBITDA declined 1.7% to $424.3 million but finished ahead of previous guidance.
  • Solid performance in the fourth quarter resulted in operating income of $46.2 million and a 2% year-over-year increase in Adjusted EBITDA, which increased by 4.4% excluding foreign exchange, acquisitions and divestitures. Margin increased 40 basis points to 10.6%.
  • Management continued to execute its transformation plan, including the deconsolidation of its European joint venture, the divestiture of its foodservice businesses, and collaborations with Genpact and TCS to outsource certain administrative functions.
  • Disciplined capital allocation with debt and share repurchases of $168.2 million and $6.4 million, respectively in 2023.
  • Management announced 2024 guidance with expectations for low single-digit growth in consolidated revenues and Adjusted EBITDA.

IRVINE, Calif., Feb. 29, 2024 (GLOBE NEWSWIRE) -- Advantage Solutions Inc. (NASDAQ: ADV) (“Advantage,” “Advantage Solutions,” the “company,” “we” or “our”), a leading provider of sales and marketing services to consumer goods manufacturers and retailers, today reported financial results for its fourth quarter and fiscal full year ended December 31, 2023. The results continue to reflect a trendline of improving financial performance and progress executing its transformation strategy.

“Our ongoing efforts to strengthen our culture, simplify our operations, improve our financial discipline and enhance our processes as a unified company resulted in a solid fourth-quarter performance,” said Advantage Solutions CEO Dave Peacock. “I am incredibly proud of our team’s success as we delivered full-year revenue growth and Adjusted EBITDA results ahead of expectations. We are committed to continuing to evolve our position in the marketplace and deliver long-term, profitable growth by enhancing our service level with clients and customers.”

The company also continues to evaluate its service offerings, consistent with its stated strategy, to ensure more focus on its mission of converting shoppers into buyers for consumer goods companies and retailers. To that end, Advantage Solutions completed additional actions to advance its transformation. Those include:

  • Divesture of foodservice businesses: The company divested its foodservice businesses, most notably Waypoint, to Prospect Hill Growth Partners LP on Jan. 31, 2024. As part of the sale, the foodservice businesses were combined with KeyImpact Sales & Systems Inc. to form Acxion Foodservice. The resulting firm creates an innovative go-to-market model to offer clients next-generation services powered by analytics. Advantage received total proceeds of approximately $100 million in mostly cash and an ongoing 7.5% stake in the combined entity.
  • Deconsolidation of the European joint venture: Advantage Solutions reduced its stake in Advantage Smollan Limited, a joint venture with the Smollan Group in Europe, from a majority stake under 60% to a minority position of 49.6% in exchange for cash and other considerations. The transaction restructures the European operation by reducing back-office complexities and expenses and simplifies the company’s overall financial reporting.
  • Administrative and technology agreements: Advantage Solutions entered into an agreement with Genpact to build an innovative, proprietary digital solution designed to streamline and automate processes behind Advantage BPO and administrative services. Additionally, the company announced a collaboration with Tata Consultancy Services to provide certain IT services.

“We believe the path to unlock Advantage Solutions’ potential lies in our core capabilities,” Peacock said. “The actions we have taken to date and potential future actions under consideration are designed to make us more nimble, insights-driven, and efficient to provide unmatched service to our clients and customers.”

In 2023, the company reduced the face value of its debt by $168.2 million in voluntary open-market repurchases of its term loan and senior secured notes while executing $6.4 million in share repurchases. Advantage’s capital allocation philosophy focuses on maximizing returns for equity holders, including deleveraging its balance sheet and investing behind core business offerings to fuel future growth.

“We believe having a healthy balance sheet and a sound infrastructure are crucial to providing clients and customers with best-in-class service,” Peacock said. “Advantage is committed to quickly implementing the right plans to generate more cash to invest in the business and position the company for long-term success.” 

Fiscal Year 2023 Highlights Compared to 2022

Revenues

  Year Ended December 31,
 Change
  2023
 2022
 $
 %
(in thousands)            
Sales $2,445,015  $2,507,017  $(62,002)  (2.5%)
Marketing  1,779,831   1,542,725   237,106   15.4%
Total Revenues $4,224,846  $4,049,742  $175,104   4.3%
 

Adjusted EBITDA and Adjusted EBITDA by Segment

  Year Ended December 31,
 Change
  2023
 2022
 $
 %
(in thousands)            
Sales $265,255  $294,234  $(28,979)  (9.8%)
Marketing  159,092   141,761   17,331   12.2%
Total Adjusted EBITDA $424,347  $435,995  $(11,648)  (2.7%)
 

Consolidated revenues grew 4.3% to $4.2 billion and increased 6.8% excluding the impact of foreign exchange and divestitures (including the deconsolidation of the European joint venture). Revenue growth in the marketing segment was driven primarily by the continued recovery of in-store sampling and demonstration services and pricing realization. The decline in the sales segment was driven by completed divestitures and an intentional client exit in late 2022, partially offset by price and volume realization.

Operating income was $76.2 million, an increase of $1.5 billion due to a non-cash goodwill impairment and intangible asset impairment charge in the fourth quarter of 2022. Inflationary cost pressures related to wage and incentive compensation and internal reorganization activities negatively impacted operating income in 2023 but were largely in line with expectations. The Company recorded a non-cash intangible asset impairment expense and a non-cash gain on the deconsolidation of subsidiaries related to the European deconsolidation in the fourth quarter of 2023.

Adjusted EBITDA declined 2.7% to $424.3 million. Price increases and increased in-store sampling and demonstration activity drove improved performance in the marketing segment. This was offset by a decline in revenues in the sales segment, inflationary cost pressure, incentive compensation, and higher technology expenses.

Net loss was $60.3 million compared with net loss of $1.4 billion in 2022 due to the one-time impairment charges. Net loss in the current period was also impacted by an unfavorable interest expense due to higher interest rates, partially offset by lower debt balances.

Fourth Quarter 2023 Highlights Compared to Fourth Quarter 2022

Revenues

  Three Months Ended
December 31,
  Change
  2023
 2022
 $
 %
(in thousands) (unaudited)  (unaudited)       
Sales $603,297  $664,670  $(61,373)  (9.2%)
Marketing  476,452   438,093   38,359   8.8%
Total Revenues $1,079,749  $1,102,763  $(23,014)  (2.1%)
 

Adjusted EBITDA and Adjusted EBITDA by Segment

  Three Months Ended
December 31,

 Change
  2023
 2022
 $
 %
(in thousands) (unaudited)  (unaudited)       
Sales $68,811  $78,076  $(9,265)  (11.9%)
Marketing  46,105   34,590   11,515   33.3%
Total Adjusted EBITDA $114,916  $112,666  $2,250   2.0%
 

Consolidated revenues declined 2.1% to $1.1 billion and increased 3.4%, excluding the impact of foreign exchange, acquisitions and divestitures. The drivers of top-line performance were similar to what drove the full-year results.

Operating income in the quarter was $46.2 million, an increase of $1.6 billion due to a non-cash goodwill impairment and intangible asset impairment charge in the prior year period. Price actions in the quarter helped to mostly offset inflationary cost pressures related to wages and benefits. Additional costs related to various internal reorganization activities were recognized in the quarter. The Company recorded a non-cash intangible asset impairment charge and a gain on deconsolidation of subsidiaries related to the European deconsolidation in the current period.

The continuing trend for improved performance led to an Adjusted EBITDA of $114.9 million, which resulted in modest year-over-year growth and margin expansion.

Net income was $17.8 million compared with a net loss of $1.4 billion in the prior year, which was impacted by the one-time impairment charges. Net income in the current period was consistent with expectations for operating performance and the net effects of the current interest rate environment and reduction in debt balances.

Balance Sheet Highlights

As of December 31, 2023, the company’s cash and cash equivalents were $126.5 million, including the reduction in cash from the deconsolidation of the European joint venture and the use of cash for debt and share repurchases in the fourth quarter. Total Debt was $1,897.5 million, and Net Debt was $1,771.0 million. The debt capitalization consists primarily of the $1,149.1 million First Lien Term Loan and $743.0 million of senior secured notes.

During the quarter, Advantage voluntarily repurchased approximately $25.0 million of its First Lien Term Loan and approximately $32.0 million of its senior secured notes at attractive discounts, resulting in a net leverage ratio of approximately 4.2x Adjusted EBITDA as of December 31, 2023, compared to 4.5x at the end of 2022. Approximately 89% of the company’s debt is hedged or at a fixed interest rate.

Fiscal Year 2024 Outlook

In light of growing business momentum and improving market dynamics, management expects 2024 revenue and Adjusted EBITDA growth in the range of low single digits, excluding the in-year impact of the completed divestitures on the 2023 results. The company plans to execute additional simplification objectives in 2024, including activities related to improving operating efficiencies and investments behind the business from a talent and technology perspective. As a result, capital expenditures are expected to be $90 million to $110 million with a tapering in the spending planned for 2025 and a return to historical spending levels in 2026. The company also establishes a long-term net leverage target below 3.5x LTM Adjusted EBITDA. Additional guidance metrics can be found in the company’s supplemental earnings presentation.

Conference Call Details

Advantage will host a conference call at 8:30 am ET on February 29, 2024 to discuss its fourth quarter and full year 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 13742873. 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 13742873.

About Advantage Solutions

Advantage Solutions is a leading provider of outsourced sales and marketing solutions 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. Advantage has offices throughout North America and strategic investments in select markets throughout Africa, Asia, Australia, Latin America 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 twelve months ended December 31, 2023. These financial statements should be read in conjunction with the information contained in the company’s Annual Report on Form 10-K, to be filed with the Securities and Exchange Commission on or about March 1, 2024.

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 other future potential pandemics or health epidemics; 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 to be filed by the company with the Securities and Exchange Commission (the “SEC”) on or about March 1, 2024, 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, Adjusted EBITDA by Segment 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, Adjusted EBITDA by Segment 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 and Adjusted EBITDA by Segment mean net (loss) income before (i) interest expense, net, (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) gain on deconsolidation of subsidiaries, (vii) loss on divestitures, (viii) equity-based compensation of Karman Topco L.P., (ix) changes in fair value of warrant liability, (x) stock based compensation expense, (xi) fair value adjustments of contingent consideration related to acquisitions, (xii) acquisition and divestiture related expenses, (xiii) costs associated with COVID-19, net of benefits received, (xiv) EBITDA for economic interests in investments, (xv) reorganization expenses, (xvi) litigation expenses, (xvii) recovery from and costs associated with the Take 5 Matter and (xviii) 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 2024 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.
Consolidated Balance Sheets
 
  December 31, 
(in thousands, except share data) 2023  2022 
ASSETS      
Current assets      
Cash and cash equivalents $126,479  $120,715 
Restricted cash  16,363   17,817 
Accounts receivable, net of allowance for expected credit
      losses of $34,807 and $22,752, respectively
  703,252   869,000 
Prepaid expenses and other current assets  165,940   149,476 
Total current assets  1,012,034   1,157,008 
Property and equipment, net  73,910   70,898 
Goodwill  855,391   887,949 
Other intangible assets, net  1,580,134   1,897,503 
Investments in unconsolidated affiliates  211,393   129,491 
Other assets  46,461   119,522 
Total assets $3,779,323  $4,262,371 
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities      
Current portion of long-term debt $13,580  $13,991 
Accounts payable  181,076   261,464 
Accrued compensation and benefits  165,701   154,744 
Other accrued expenses  153,015   133,173 
Deferred revenues  27,925   37,329 
Total current liabilities  541,297   600,701 
Long-term debt, net of current portion  1,852,784   2,022,819 
Deferred income tax liabilities  204,251   297,874 
Warrant liability  667   953 
Other long-term liabilities  76,247   110,554 
Total liabilities  2,675,246   3,032,901 
       
Redeemable noncontrolling interest     3,746 
       
Equity attributable to stockholders of Advantage Solutions Inc. 
Preferred stock, no par value, 10,000,000 shares
     authorized; none issued and outstanding
     as of December 31, 2023 and 2022, respectively
      
Common stock, $0.0001 par value, 3,290,000,000
     shares authorized; 322,235,261 and 319,690,300
     shares issued and outstanding as of December 31,
     2023 and 2022, respectively
  32   32 
Additional paid in capital  3,449,261   3,408,836 
Accumulated deficit  (2,314,650)  (2,247,109)
Loans to Karman Topco L.P.  (6,387)  (6,363)
Accumulated other comprehensive loss  (3,945)  (18,849)
Treasury stock, at cost; 3,600,075 and 1,610,014 shares
     as of December 31, 2023 and 2022, respectively
  (18,949)  (12,567)
Total equity attributable to stockholders of Advantage
     Solutions Inc.
  1,105,362   1,123,980 
Nonredeemable noncontrolling interest  (1,285)  101,744 
Total stockholders’ equity  1,104,077   1,225,724 
Total liabilities, redeemable noncontrolling interest,
     and stockholders’ equity
 $3,779,323  $4,262,371 
 


Advantage Solutions Inc.
Consolidated Statements of Operations and Comprehensive (Loss) Income
 
 Three Months Ended
December 31,
  Year Ended
December 31,
 
 2023  2022  2023  2022 
(in thousands, except share and per share data)(unaudited)  (unaudited)       
Revenues$1,079,749  $1,102,763  $4,224,846  $4,049,742 
Cost of revenues 915,985   956,927   3,660,464   3,493,183 
Selling, general, and administrative expenses 80,854   51,863   265,091   187,504 
Impairment of goodwill and indefinite-lived assets 43,500   1,572,523   43,500   1,572,523 
Depreciation and amortization 54,390   59,078   224,697   233,075 
Gain on deconsolidation of subsidiaries (58,891)     (58,891)   
(Gain) loss on divestitures (1,140)  (90)  19,068   2,863 
Income from unconsolidated investments (1,141)     (5,273)   
Total expenses 1,033,557   2,640,301   4,148,656   5,489,148 
Operating income (loss) 46,192   (1,537,538)  76,190   (1,439,406)
Other (income) expenses:           
Change in fair value of warrant liability (873)  220   (286)  (21,236)
Interest expense, net 45,850   40,831   165,802   104,459 
Total other expenses 44,977   41,051   165,516   83,223 
Income (loss) before income taxes 1,215   (1,578,589)  (89,326)  (1,522,629)
(Benefit from) provision for income taxes (16,573)  (156,860)  (29,008)  (145,337)
Net income (loss) 17,788   (1,421,729)  (60,318)  (1,377,292)
Less: net income attributable to noncontrolling interest 359   2,168   2,940   3,210 
Net income (loss) attributable to stockholders of Advantage
     Solutions Inc.
 17,429   (1,423,897)  (63,258)  (1,380,502)
Other comprehensive loss, net of tax:           
Foreign currency translation adjustments 6,280   11,129   5,817   (14,370)
Total comprehensive (loss) income attributable to
     stockholders of Advantage Solutions Inc.
$23,709  $(1,412,768) $(57,441) $(1,394,872)
            
Basic (loss) earnings per common share$0.05  $(4.45) $(0.20) $(4.33)
Diluted (loss) earnings per common share$0.05  $(4.45) $(0.20) $(4.33)
            
Weighted-average number of common shares: 324,639,562   319,682,507   323,677,515   318,682,548 
Weighted-average number of common shares,
     assuming dilution
 340,320,151   319,682,507   323,677,515   318,682,548 
 


Advantage Solutions Inc.
Consolidated Statement of Cash Flows
 
  Year Ended December 31, 
(in thousands) 2023  2022  2021 
          
CASH FLOWS FROM OPERATING ACTIVITIES         
Net (loss) income $(60,318) $(1,377,292) $57,549 
Adjustments to reconcile net (loss) income to net cash provided by
   operating activities
         
Noncash interest income  (7,660)  (43,785)  (8,315)
Amortization of deferred financing fees  8,292   8,860   9,250 
Impairment of goodwill and indefinite-lived assets  43,500   1,572,523    
Extinguishment costs related to repayment and repricing of long-term debt        1,569 
Depreciation and amortization  224,697   233,075   240,041 
Change in fair value of warrant liability  (286)  (21,236)  955 
Fair value adjustments related to contingent consideration  10,362   4,774   5,763 
Deferred income taxes  (80,416)  (190,754)  (10,012)
Equity-based compensation of Karman Topco L.P.  (2,524)  (6,934)  (15,030)
Stock-based compensation  42,880   39,825   39,412 
Equity in earnings of unconsolidated affiliates  (5,511)  (10,609)  (10,298)
Distribution received from unconsolidated affiliates  2,100   1,826   1,465 
Loss on disposal of property and equipment  3,318   644   7,162 
Loss on divestitures  19,068   2,863    
Gain on deconsolidation of subsidiaries  (58,891)      
Gain on repurchases from the Term Loan Facility and Senior Secured Notes debt  (8,665)      
Changes in operating assets and liabilities, net of effects from
   divestitures and purchases of businesses:
         
Accounts receivable, net  45,601   (75,688)  (215,501)
Prepaid expenses and other assets  50,626   (22,738)  (14,000)
Accounts payable  (26,175)  (17,635)  46,000 
Accrued compensation and benefits  26,941   16,678   (2,363)
Deferred revenues  6,974   (11,551)  (2,694)
Other accrued expenses and other liabilities  5,082   18,412   (4,962)
Net cash provided by operating activities  238,995   121,258   125,991 
CASH FLOWS FROM INVESTING ACTIVITIES         
Purchase of businesses, net of cash acquired     (74,206)  (42,668)
Purchase of investment in unconsolidated affiliates  (3,023)  (775)  (2,000)
Purchase of property and equipment  (46,271)  (40,455)  (31,175)
Proceeds from divestitures  21,108   1,896    
Deconsolidation of subsidiaries cash and
     cash equivalents and restricted cash, net of proceeds
  (31,465)      
Proceeds from sale of investment in unconsolidated affiliates  4,428       
Net cash used in investing activities  (55,223)  (113,540)  (75,843)
CASH FLOWS FROM FINANCING ACTIVITIES         
Borrowings under lines of credit  99,538   326,090   61,629 
Payments on lines of credit  (99,102)  (326,968)  (111,736)
Proceeds from government loans for COVID-19 relief  1,339      2,975 
Principal payments on long-term debt  (13,602)  (13,394)  (13,309)
Repurchases of Term Loan Facility and Senior Secured Notes debt  (156,559)      
Proceeds from issuance of common stock  2,248   3,320   794 
Payments for taxes related to net share settlement
     under 2020 Incentive Award Plan
  (1,880)      
Contingent consideration payments  (4,898)  (23,164)  (9,814)
Holdback payments  (1,886)  (11,057)  (3,989)
Purchase of treasury stock  (6,382)     (12,567)
Financing fees paid     (1,464)  (74)
Contribution from noncontrolling interest     5,217    
Redemption of noncontrolling interest  (154)  (224)  (209)
Net cash used in financing activities  (181,338)  (41,644)  (86,300)
Net effect of foreign currency changes on cash  1,876   (8,179)  (3,177)
Net change in cash, cash equivalents and restricted cash  4,310   (42,105)  (39,329)
Cash, cash equivalents and restricted cash, beginning of period  138,532   180,637   219,966 
Cash, cash equivalents and restricted cash, end of period $142,842  $138,532  $180,637 
SUPLLEMENTARY NON-CASH INVESTING AND FINANCING ACTIVITIES         
Exchange of ownership of SPV for fair value of GSH $15,854  $  $ 
Non-cash proceeds from divestitures $4,283  $  $ 
Purchase of property and equipment recorded in accounts payable
   and accrued expenses
 $1,201  $842  $759 
SUPPLEMENTAL CASH FLOW INFORMATION         
Cash payments for interest $174,767  $126,560  $137,467 
Cash received from interest rate derivatives $28,808  $6,527  $ 
Cash payments for income taxes, net $39,007  $45,729  $40,189 
 


Advantage Solutions Inc.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(Unaudited)
 
ConsolidatedThree Months Ended
December 31,
  Year Ended
December 31,
 
 2023  2022  2023  2022 
(in thousands)           
Net income (loss)$17,788  $(1,421,729) $(60,318) $(1,377,292)
Add:           
Interest expense, net 45,850   40,831   165,802   104,459 
(Benefit from) provision for income taxes (16,573)  (156,860)  (29,008)  (145,337)
Depreciation and amortization 54,390   59,078   224,697   233,075 
Impairment of goodwill and indefinite-lived assets 43,500   1,572,523   43,500   1,572,523 
Gain on deconsolidation of subsidiaries (58,891)     (58,891)   
(Gain) loss on divestitures (1,140)  (90)  19,068   2,863 
Equity-based compensation of Karman Topco L.P.(a) 754   208   (2,524)  (6,934)
Change in fair value of warrant liability (873)  220   (286)  (21,236)
Fair value adjustments related to contingent consideration
     related to acquisitions(b)
 (1,229)  (674)  10,362   4,774 
Acquisition and divestiture related expenses(c) 2,503   4,149   7,024   21,039 
Reorganization expenses(d) 17,620   1,636   57,021   6,094 
Litigation expenses(e) 855   6,157   9,519   5,357 
Costs associated with COVID-19, net of benefits received(f) (2)  2,263   3,283   7,208 
Costs associated with (recovery from) the Take 5 Matter(g) 63   377   (1,380)  2,465 
Stock-based compensation expense(h) 10,370   9,919   42,880   39,825 
EBITDA for economic interests in investments(i) (69)  (5,342)  (6,402)  (12,888)
Adjusted EBITDA$114,916  $112,666  $424,347  $435,995 


Sales SegmentThree Months Ended
December 31,
  Year Ended
December 31,
 
 2023  2022  2023  2022 
(in thousands)           
Operating (loss) income$29,471  $(1,389,107) $38,443  $(1,323,192)
Add:           
Depreciation and amortization 36,791   40,075   154,891   161,385 
Impairment of goodwill and indefinite-lived assets 43,500   1,421,719   43,500   1,421,719 
Gain on deconsolidation of subsidiaries (58,891)     (58,891)   
(Gain) loss on divestitures (1,086)  (90)  14,911   2,863 
Equity-based compensation of Karman Topco L.P.(a) 552   283   (1,270)  (3,721)
Fair value adjustments related to contingent consideration
     related to acquisitions(b)
 (1,464)  (4,442)  6,616   550 
Acquisition and divestiture related expenses(c) 1,817   898   4,887   11,679 
Reorganization expenses(d) 12,166   1,307   36,853   4,826 
Litigation expenses(e) 223   6,157   6,860   6,057 
Costs associated with COVID-19, net of benefits received(f) 5   611   369   1,412 
Stock-based compensation expense(h) 5,439   6,016   23,850   24,025 
EBITDA for economic interests in investments(i) 288   (5,351)  (5,764)  (13,369)
Sales Segment Adjusted EBITDA$68,811  $78,076  $265,255  $294,234 


Marketing SegmentThree Months Ended
December 31,
  Year Ended
December 31,
 
 2023  2022  2023  2022 
(in thousands)           
Operating income (loss)$16,721  $(148,431) $37,747  $(116,214)
Add:           
Depreciation and amortization 17,599   19,003   69,806   71,690 
Impairment of goodwill and indefinite-lived assets    150,804      150,804 
(Gain) loss on divestitures (54)     4,157    
Equity-based compensation of Karman Topco L.P.(a) 202   (75)  (1,254)  (3,213)
Fair value adjustments related to contingent consideration
     related to acquisitions(b)
 235   3,768   3,746   4,224 
Acquisition and divestiture related expenses(c) 686   3,251   2,137   9,360 
Reorganization expenses(d) 5,454   329   20,168   1,268 
Litigation expenses (recovery)(e) 632      2,659   (700)
Costs associated with COVID-19, net of benefits received(f) (7)  1,652   2,914   5,796 
Costs associated with (recovery from) the Take 5 Matter(g) 63   377   (1,380)  2,465 
Stock-based compensation expense(h) 4,931   3,903   19,030   15,800 
EBITDA for economic interests in investments(i) (357)  9   (638)  481 
Marketing Segment Adjusted EBITDA$46,105  $34,590  $159,092  $141,761 


(a)Represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Karman Topco L.P. ("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 adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions. See Note 9—Fair Value of Financial Instruments to our consolidated financial statements for the years ended December 31, 2023 and 2022.
(c)Represents fees and costs associated with activities related to our acquisitions, divestitures, and related reorganization activities, including professional fees, due diligence, and integration activities.
(d)Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.
(e)Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.
(f)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.
(g)Represents (i) cash receipts from an insurance policy for claims related to the Take 5 Matter; and (ii) costs associated with the Take 5 Matter, primarily, professional fees and other related costs.
(h)Represents non-cash compensation expense related to the 2020 Incentive Award Plan and the 2020 Employee Stock Purchase Plan.
(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.
  


Advantage Solutions Inc.
Disaggregated revenues
 
 Three Months Ended
December 31,
  Year Ended
December 31,
 
 2023  2022  2023  2022 
(in thousands)(unaudited)  (unaudited)       
Sales brand-centric services$328,983  $358,966  $1,362,612  $1,364,673 
Sales retail-centric services 274,314   305,704   1,082,403   1,142,344 
Total sales revenues 603,297   664,670   2,445,015   2,507,017 
Marketing brand-centric services 149,473   166,063   545,243   559,218 
Marketing retail-centric services 326,979   272,030   1,234,588   983,507 
Total marketing revenues 476,452   438,093   1,779,831   1,542,725 
Total Revenues$1,079,749  $1,102,763  $4,224,846  $4,049,742 
 


Advantage Solutions Inc.
Reconciliation of Total Debt to Net Debt
(Unaudited)
 
 December 31, 2023 
(in millions)  
Current portion of long-term debt$13.6 
Long-term debt, net of current portion 1,852.8 
Less: Debt issuance costs (31.1)
Total Debt 1,897.5 
Less: Cash and cash equivalents 126.5 
Total Net Debt$1,771.0 
   
Adjusted EBITDA$424.3 
Net Debt / Adjusted EBITDA (Net Leverage) Ratio4.2x 
   


Investor Contacts: 
Sean Choksi
sean.choksi@advantagesolutions.net

Ruben Mella
ruben.mella@advantagesolutions.net   

Media Contacts: 
Peter Frost
peter.frost@advantagesolutions.net   


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