Advantage Solutions today reported third-quarter revenues of $939.3 million, up 2.4% from the same period a year ago excluding the impact related to the deconsolidation of its European joint venture, bolstered by a strong performance from the company’s experiential and retailer services businesses.
Company executives reaffirmed financial guidance for the full year, with revenues and adjusted earnings before income taxes, depreciation and amortization (EBITDA) from continuing operations projected to grow low single digits.
Despite soft market conditions for many of the retailers and consumer packaged goods brands that Advantage serves, CEO Dave Peacock said the company’s focus on providing differentiated capabilities through improved processes and technologies is driving better outcomes for clients, regardless of market conditions.
“We have taken significant actions to simplify the business, streamline operations and processes, and improve financial discipline,” Peacock told Wall Street analysts and investors on the company’s quarterly earnings call Thursday.
As a result, he said, Advantage is poised to enhance its market leadership while positioning the company to deliver long-term, profitable growth.
“Our progress is rooted in focusing on where we have a right to win,” he said. “This includes strengthening our core competitive advantages in areas like headquarter selling, retail merchandising, sampling and other areas of support that we provide to clients and customers.”
In the quarter, Advantage reported adjusted EBITDA of $101 million, an 8.1% increase compared to the same period a year ago.
The company reported a third-quarter net loss from continuing operations of $37.3 million, compared to a net loss of $29.6 million for the same period a year ago.
Advantage also said it reduced debt in the quarter by $80 million with a focus of achieving the long-term objective of reducing Net Debt to Adjusted EBITDA to less than 3.5 times.
A renewed focus on technology
Advantage is modernizing technology to drive efficiencies, unlock value for clients and enhance its competitive advantage, Peacock said on the call with analysts.
“Our market position and tech tools give us a unique vantage point on the industry,” Peacock said. “We have access to performance insights at multiple levels down to retailer, location aisle and shelf.”
Advantage is partnering with tech companies to better equip its teams with modern tools like image recognition, shelf-level intelligence and proprietary planogram technology.
“This is a great opportunity to drive traffic into stores with a workforce that can execute on the ground at scale — physically placing promos and signage to help brands break through and drive conversion at the shelf, where the consumer decision is made at the point of sale,” Peacock said on the call.
The movement to enhance technology is reflected throughout the company, Peacock said, citing initiatives such as replacing the enterprise resource planning (ERP) system, modernizing cybersecurity and upgrading IT systems to better support frontline teammates, ultimately saving time and costs.
Advantage is also incorporating AI into functions across the company that require analytical capabilities, including contract management, routing merchandisers, HR workflow, sales tools and data analysis.
“With our reach and relationships, we can translate those real-time insights into action faster and at scale in ways that competitive models cannot,” Peacock said.
Overview of business units
Peacock also provided an overview of wins and challenges for the company’s three business units: branded services, experiential services and retailer services.
“Experiential services and retailer services delivered healthy performance, resulting in revenue and adjusted EBITDA growth,” Peacock said. “In branded services, we continue to navigate the impacts of a challenging consumer environment for our clients while managing costs and leveraging new tools and technology to enhance our sales and merchandising effectiveness.”
- Branded Services. Despite a challenging quarter due to market softness affecting CPG companies, the branded services business unit notched some successes through cross-selling solutions with existing clients to solve their challenges.
For example, Advantage expanded its relationship a start-up energy beverage company by adding services, including headquarter sales in the convenience channel, e-commerce and management of order-to-cash.
“It’s early days, but we are discovering more and more opportunities to cross-sell our capabilities within branded services, and in the marketing and selling of our interconnected capabilities across all three business segments,” Peacock said. - Experiential Services. Strong client demanded amounted to a double-digit year-over-year increase in events, fueling an 11% increase in revenue for experiential services from the same period a year ago.
In the third quarter, the company signed an agreement with a major department store to support its fragrance team for the upcoming holiday season. Advantage is also working with the retailer on a creative and production strategy for a fragrance kit launching this spring. - Retailer Services. Advantage’s retailer services team expanded its services for merchandising solutions in the third quarter. In particular, the company supported a national grocery chain with store remodels and has completed the build-out of 65 new locations in the past seven months.
Advantage also continues to grow its private brand footprint outside of the traditional grocery channel, recently signing an agreement with a major, national convenience store chain, to develop a “best-in-class” private brand program.
“Our long-term success will come from our 70,00 dedicated and passionate teammates,” Peacock said. “We are grateful for their efforts to do more as a strategic partner for our clients.”
