Advantage Solutions Inc. · NASDAQ:ADV
Advantage Solutions — Conyers Park II Acquisition — Debt Investor Presentation (October 2020)
44 slides from Advantage Solutions's debt investor presentation, Oct 14, 2020
Slide 1: Lender Presentation October 2020
Lender Presentation October 2020
Slide 2: Disclaimer
Disclaimer Forward Looking Statements Certain statements in this presentation may be considered forward-looking statements. Forward-looking statements generally relate to future events or future financial or operating performance of Conyers Park II Acquisition Corp. (“CP”) or Advantage Solutions Inc
Slide 3: Today's Presenters
Today’s Presenters Advantage Solutions Conyers Park II Joined Centerview Capital as a partner in 2016 Vice Chairman of The Simply Good Foods Company Former CEO and President of Big Heart Pet Brands (fka Del Monte Corporation) Former CEO and President of The Hershey Company Previous senior management
Slide 4: Today's Agenda
Today’s Agenda 3. Business Overview 1. Transaction Summary 5. Conclusion 4. Financial Overview and Recent Performance Update 51 102 255 204 0 2. Conyers Park Investment Overview
Slide 5: Transaction Summary
Transaction Summary Section 1
Slide 6: Transaction Summary
Advantage Solutions (“Advantage” or the “Company”) is the leading provider of outsourced sales and marketing solutions to manufacturers of consumer goods and retailers across multiple channels The Company’s solutions include in-store and online headquarter sales, merchandising and marketing services
Slide 7: Sources & Uses and Pro Forma Capitalization
Sources & Uses and Pro Forma Capitalization 153 204 255 255 255 153 204 255 204 51 102 255 204 0 Note: Adj. EBITDA reflects Management Adj. EBITDA which excludes certain adjustments that are included in the PF Credit Adj. EBITDA definitions. Importantly, the Adj. EBITDA presented above excludes the
Slide 8: Transaction Timeline
Transaction Timeline Schedule Summary of Events Wednesday, October 14 Lender Meeting Thursday, October 22 First Lien Term Loan Commitments Due at 5pm Friday, October 23 Price and Allocate First Lien Term Loan Thereafter Close and Fund Transaction Market Holiday October 2020 Sun Mon Tue Wed Thu Fri S
Slide 9: Summary of Terms – ABL Facility
Summary of Terms – ABL Facility 153 204 255 255 255 153 204 255 204 51 102 255 204 0 Borrower: Advantage Sales & Marketing Inc. (the “Borrower”) Guarantors: Holdings and each wholly owned material U.S. and Canadian subsidiaries of the Borrower, subject to customary exceptions Security(1)(2): First p
Slide 10: Summary of Terms – First Lien Term Loan
Summary of Terms – First Lien Term Loan 153 204 255 255 255 153 204 255 204 51 102 255 204 0 Fixed Asset Collateral shall comprise of all collateral of the Loan Parties other than the Current Asset Collateral (including, to the extent constituting Collateral, intellectual property, equipment, and a
Slide 11: Conyers Park Investment Overview
Conyers Park Investment Overview Section 2
Slide 12: Our Investment Thesis
Our Investment Thesis Advantage is the leader in the mission-critical sales and marketing services industry Emerged as the go-to-company in the industry Significant and durable competitive advantages due to scale, differentiated capabilities and investment in talent and technology over time Operates
Slide 13: Why We Believe Advantage Is a Terrific Business and a Terrific Value
Why We Believe Advantage Is a Terrific Business and a Terrific Value Advantage is better positioned versus competition today than it ever has been Clear leader in the space #1 share in key business units Unmatched scale and capabilities and proprietary technology tools Resilient business model that
Slide 14: Business Overview
Business Overview Section 3
Slide 15: Company Snapshot
Company Snapshot 400+ Data Analytics Professionals …resulting in durable competitive advantages and high barriers to entry Advantage manages critical sales, merchandising and marketing activities for clients at scale across the entire consumer ecosystem… 3,500+ Clients 200,000+ Retail Outlets 58,000
Slide 16: What Advantage Does
What Advantage Does Essential partner to leading brands and retailers, helping clients reach consumers every day in-store and online through technology-enabled sales and marketing solutions SHOPPER’S PATH TO PURCHASE Pre-Shop: Build Awareness and Drive Traffic Shop: Brand Engagement and Influence Pu
Slide 17: We Divide Advantage Into Two Operating Segments
We Divide Advantage Into Two Operating Segments 2019A Total Revenue of $3.8bn Clear market leader across core service lines in both Sales and Marketing segments with attractive platforms for growth in e-commerce Sales Revenue $2.0bn (52% of Total) Marketing Revenue $1.8bn (48% of Total) Traditional
Slide 18: Our Sales Business: Leader in Essential Sales and Merchandising Services
Our Sales Business: Leader in Essential Sales and Merchandising Services U.S. Sales Agency Revenue (Data as of 2018) Acosta Crossmark Other Source: Market data represents estimates from Dechert-Hampe industry report (based on 2018 data). (1)Traditional retail channels includes physical and digital o
Slide 19: Our Marketing Business: Leader in Attractive Large and Growing Categories
Our Marketing Business: Leader in Attractive Large and Growing Categories Market leader in experiential marketing and sampling $1bn+ of revenue Sticky long-term partnerships with leading retailers Competitive advantages from scale, expertise and technology create high barriers to entry Innovation le
Slide 20: How Advantage Services the E-commerce Market
How Advantage Services the E-commerce Market Total U.S. Grocery Sales Mix 2020E Est. U.S. E-commerce Grocery Sales Mix How Advantage Solutions Services Market Online Retailers (e.g., Amazon and Other Pure-play E-tail) Key Services: Sales (1P & 3P), Merchandising, Marketing, & Other Opportunity Type:
Slide 21: Our Digital Commerce Services
Our Digital Commerce Services: Unique Capabilities to Win in E-commerce Market Building end-to-end platform to manage all aspects of clients’ e-commerce value chain across sales, merchandising and marketing activities Leading partner at key e-commerce retailers including: Well positioned to capture
Slide 22: Advantage is an Indispensable Component of the Value Chain
Advantage is an Indispensable Component of the Value Chain… Deeply integrated with leading brands and retailers, managing critical components of how they execute their go-to-market strategy to grow their business every day Brand Partnership: Leading CPG Manufacturer Retailer Partnership: Leading Gro
Slide 23: With Expanding Partnerships from Earned Trust
…With Expanding Partnerships from Earned Trust… Retail Service Agency National Headquarter Sales Retail Experiential Business Intelligence and Technology Food Service Marketing Consumer Promotion Agency Shopper Marketing Agency E-Commerce Agency Sales Marketing Strong Partnership Providing Critical
Slide 24: Resulting in Strong, Long-Term Relationships
…Resulting in Strong, Long-Term Relationships… (1) Defined as prior year total revenues less annual revenues from lost clients in that period, divided by prior year total revenues. From 2010 through 2019, Advantage has achieved an average revenue-weighted client retention rate of ~98%(1)
Slide 25: Creating a Proven Track Record Across Economic Cycles
…Creating a Proven Track Record Across Economic Cycles 15.8% 16.1% 17.8% 16.7% 17.5% 17.5% 17.4% 19.1% 19.3% 19.6% 18.2% 12.7% Note: Dollars in millions. Acquisition of Daymon closed December 2017. Revenue and Adjusted EBITDA CAGRs based on 2007 – 2019 time period. Organic revenue CAGR based on 2008
Slide 26: Daymon Acquisition Significantly Strengthened Competitive Position
Daymon Acquisition Significantly Strengthened Competitive Position #1 Provider of Brand Services Retailer-Centric Merchandising Private Label Services Experiential Marketing Filled Gap Filled Gap Share Added pioneer and leader in retailer merchandising Added attractive in-store demo partnerships wit
Slide 27: COVID-19 Temporary Headwinds for Portions of Advantage
COVID-19 Temporary Headwinds for Portions of Advantage Marketing Sales % of 2019A Revenues Current Status* COVID-19 Impact Post-COVID-19 Long-Term Outlook Temporary Disruption Positive / Neutral Neutral Neutral Positive Positive Resilient business model and flexible cost structure position Advantage
Slide 28: Financial Overview and Recent Performance Update
Financial Overview and Recent Performance Update Section 4
Slide 29: Key Drivers of Financial Performance
Key Drivers of Financial Performance Large and Stable End Markets Provide Strong Baseline Stable consumer end market CAGR of ~3%(1) Diverse Streams of Revenue 2019 Revenues ~52% Sales and ~48% Marketing Highly Recurring Relationships 98% Avg. Revenue-weighted Client Retention Rate from 2010 - 2019 C
Slide 30: Summary Financials – Revenue
Summary Financials – Revenue Sales Note:Dollars in millions. Includes historical acquisitions. Numbers presented may not foot due to rounding. Marketing Commentary Daymon acquisition contributed meaningful growth in 2018 Strong organic growth in 2019 2020 meaningfully impacted by COVID-19 à strength
Slide 31: Summary Financials – Adjusted EBITDA (and % Margin)
Summary Financials – Adjusted EBITDA (and % Margin) Commentary Acquisition of Daymon business contributed to overall margin decline in 2018 due to mix Modest margin growth from cost efficiencies and favorable mix in 2019 Sales Marketing Note:Dollars in millions. Includes historical acquisitions. Num
Slide 32: First Half of 2020 Summary
First Half of 2020 Summary Revenue Adjusted EBITDA (and % Margin) Strong start to the year prior to COVID-19 (January – February) COVID-19 impacted the business starting in March Q2 results down largely due to temporary disruption in the experiential marketing business Strong Adjusted EBITDA perform
Slide 33: Long-Term Growth Algorithm
Long-Term Growth Algorithm Long-term organic revenue growth drivers (2023 & Beyond) Underlying growth of the CPG industry and food inflation Historical ’08 – ’19 organic revenue CAGR of 4.0% Upside from whitespace with existing clients, new business wins and outsourcing trends Long-term organic Adju
Slide 34: Strategic and Financially Attractive Tuck-In Acquisition Strategy
Strategic and Financially Attractive Tuck-In Acquisition Strategy Number of Acquisitions Per Year Philosophy Disciplined approach to M&A that has delivered consistent and attractive returns Invest where there are unmet client needs and there are… Industry tailwinds Opportunities to fill capability g
Slide 35: Conclusion
Conclusion Section 5
Slide 36: In Conclusion…
In Conclusion… Advantage is a clear leader in the mission-critical sales and marketing industry with unmatched scale, capabilities, and proprietary technology Better positioned versus competition today than it ever has been High quality management team à proven winners Conyers Park II investment add
Slide 37: Appendix
Appendix
Slide 38: Q2 2020 Update
Q2 2020 Update Note: There may be variance due to rounding. Selected Commentary Summary Financials 2020 Q2 Total Revenues: Decreased ($280mm), or (30.4%), y/y driven by COVID-19. Organic revenue ex-FX decreased (32.2%) Sales: 2020 Q2 revenues decreased ($15mm), or (3.1%), and organic revenue ex-FX d
Slide 39: First Half of 2020 Update
First Half of 2020 Update Selected Commentary Summary Financials 2020 YTD Q2 Total Revenues: Decreased ($270mm), or (15.1%), y/y driven by COVID-19. Organic growth ex-FX decreased (16.9%) Sales: 2020 YTD Q2 revenue increased $37mm, or 3.9% y/y, and organic growth ex-FX increased 0.5%, y/y Marketing:
Slide 40: Non-GAAP Reconciliation (1/4)
Non-GAAP Reconciliation (1/4) Note: Dollars in millions. Numerical figures included in this slide have been subject to rounding adjustments Historical management fees paid to existing shareholders and non-cash stock based compensation expense. Includes one-time acquisition-related expenses and certa
Slide 41: Non-GAAP Reconciliation (2/4)
Non-GAAP Reconciliation (2/4) Adjusted EBITDA reconciliation on annual basis for 2007 – 2019 time period Note: Dollars in millions. Unaudited periods 2010 and 2014 are both comprised of audited stub periods to sum up to full year financials (individual stub periods within each year are audited, full
Slide 42: Non-GAAP Reconciliation (3/4)
Non-GAAP Reconciliation (3/4) Year Ended December 31, LTM Period Ended June 30, (in millions) 2018 2019 2020 Net (loss) income $ (1,151) $ (20) $ (22) Add: Interest expense, net 230 232 215 Income Tax Expense / (Benefit) (168) 1 (11) Depreciation and amortization 225 233 235 Management Fee and Stock
Slide 43: Non-GAAP Reconciliation (4/4)
Non-GAAP Reconciliation (4/4) Note: Dollars in millions. Numerical figures included in this slide have been subject to rounding adjustments Historical management fees paid to existing shareholders and non-cash stock based compensation expense. Includes one-time acquisition-related expenses and certa
Slide 44: Organizational Structure
Organizational Structure Advantage Solutions Inc. (“Advantage Solutions”) Karman Intermediate Corp. (“Holdings”) Advantage Sales & Marketing Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Parent Guarantor of the New Senior Secured Credit Facilities Borrower under the New Senior Secured Credi
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