Slide 1: 2023 Earnings Presentation
2023 Earnings Presentation February 29, 2024
Slide 2: Disclaimer
Disclaimer Forward-Looking Statements Advantage believes that the use of Adjusted EBITDA, Adjusted EBITDA by Segment, Adjusted EBITDA margin, Net Debt, Adjusted Unlevered Free Cash Flow and Adjusted Unlevered Free Cash Flow as a percentage of Adjusted EBITDA provides an additional tool Certain state
Slide 3: 2023: An Important Year
2023: An Important Year ► 2023 continued trend of healthy financial performance ► Growth acceleration plan expected to enhance value creation • Reported Revenues of $4.2B (+4.3% vs. 2022); +6.8% excluding • Simplification to align capabilities with economic buyers divestitures (including Smollan dec
Slide 4: Enhancing Capabilities to Serve Consumer Brands and Retailers
Enhancing Capabilities to Serve Consumer Brands and Retailers A clear right to Talented & Simplification Strong client Potential win in consumer passionate strategy & customer upside & retail people relationships Advantage provides Brian McRoskey, Reduced stake in Secured a primary service Opportuni
Slide 5: Recent Actions to Simplify Advantage
Recent Actions to Simplify Advantage Foodservice Key Collaborations Divested foodservice businesses (1/31/24) Genpact (1/31/24) ~$100M in proceeds, inclusive of 7.5% stake in combined Creating an innovative, proprietary digital solution to business; Advantage to hold seat on the Acxion Board of stre
Slide 6: Our Values
WHAT WE STAND FOR PUT SERVE WITH Our PEOPLE FIRST HEART Values LEAD EXECUTE WIN WITH RELENTLESSLY TOGETHER INSIGHTS 6
Slide 7: Macro Trends Favor Advantage
Macro Trends Favor Advantage Focus on Inflation Food-at-Home Shoppers Innovation Abating Retailers interested in Emerging stability to Food-away-from-home Growing pockets of private brands for food and encourage typical shopping pricing continues to financially strained personal care patterns outpac
Slide 8: Uniquely Positioned at Intersection of…
Uniquely Positioned at Intersection of… CPG Retailers Manufacturers E-Commerce Physical Retail National Private Brand Brand 8
Slide 9: Adj. EBITDA Performance
Adj. EBITDA Performance 2023 4Q’23 $ in millions. $ in millions. Y/Y growth (3%) Y/Y growth +2% Total $424 $436 $50 0 $20 0 $45 0 $18 0 $40 0 $16 0 $115 $113 Advantage $35 0 $14 0 $30 0 $12 0 $25 0 $10 0 $20 0 $80 $15 0 $60 $10 0 $40 % margin $50 10.0% 10.8% % margin $20 10.6% 10.2% $- $- 2023A 2022
Slide 10: Healthy Organic Revenue Trends in 2023
Healthy Organic I N - S T OR E S A M P LI N G A N D D E M O N S TR A T I ON E V E N T C O U N T Revenue Trends in 2023 Sales ► Year-over-year comp impacted by +21% YOY Segment divestitures, international stake sell- down and intentional client exit ► Strong realization of pricing and growth in merch
Slide 11: Recent Strategic Actions
Recent Strategic Actions 2023 Revenues 2023 Adj. EBITDA $ in millions. $ in millions. Represents third party Represents third party $4,225 reseller, Atlas, and $424 reseller, Atlas, and $157 Foodservice $17 Foodservice $374 $3,693 Represents ~11 months of Advantage Smollan stake reporting $408 $3,69
Slide 12: Capitalization Summary
Capitalization Summary As of 12/31/23 Net Debt Overview Maturity Schedule $ in millions Maturity Rate Outstanding $ in millions Undrawn revolver provides (2) First Lien Term Loan 2027 S+4.50% $1,149 $1,649(3) excess liquidity Senior Secured Notes 2028 6.50% 743 $500 Other Debt 5 $1,149 $743 Total Gr
Slide 13: 2024 Guidance
2024 Guidance Strategic Action Commentary $ millions ► Expect to build on 4Q’23 momentum Impact of achieved for revenues and adjusted 2023 Divestitures and EBITDA growth, with continued (Reported) Deconsolidation 2024 Guidance emphasis on sampling and demonstration rebuild and pricing in Revenues $4
Slide 14: Unmatched Operational Scale
Unmatched Operational Scale 20 20 20 20 20 3,500+ CPG Brand Clients 15+ Trade Channels 300+ IT Professionals 100,000+ Retailer 70,000+ Associates Outlets Brands Retailers Advantage Advantage Clients include Customers include >4/5th of Top 25 >2/3rd of Top 25 CPG Brands (1) Retailers(2) Helping brand
Slide 15: Strategic IT and Systems Initiatives
Strategic IT and Systems Initiatives MODERNIZE TRANSFORM DIFFERENTIATE Unify front-line Consolidate retail Modernize Upgrade talent Unlock value Innovate services, product financial management staffing and demonstration of data and through systems system scheduling platforms analytics AI/automation
Slide 16: ERP Implementation
ERP Implementation Transformation Program Overview Enabler • Current system is approaching end of life • Total 2023 – 2026 estimated investment: ~$70 – 80M - ~75% Capex / ~25% Opex Simplification Reduction of - ~40% of spend anticipated in 2024 and manual • Run-rate spend increase post-full deployme
Slide 17: Anticipated new segment structure
Anticipated simplified Anticipated new structure to have three distinct segments: structure expected to align 1. 1 Branded Services (businesses serving CPG companies) capabilities and economic 2. Retailer Services (businesses serving retailers) buyers, enabling growth 2 Improved collaboration can 3.
Slide 18: Appendix
Appendix
Slide 19: 2023 Financial Results
2023 Financial Results Revenues Adj. EBITDA $ in millions $ in millions Y/Y growth +4% +7%1 Y/Y growth (3%) Total $4,225 $4,050 $424 $436 $50 0 $45 0 $40 0 Advantage $35 0 $30 0 $25 0 $20 0 $15 0 $10 0 % margin $50 10.0% 10.8% $- 2023A 2022A 2023A 2022A Y/Y growth (3%) +1%1 Y/Y growth (10%) Sales $5
Slide 20: Q4'23 Financial Results
Q4’23 Financial Results Revenues Adj. EBITDA $ in millions $ in millions Y/Y growth (2)% +3%1 Y/Y growth +2% Total $1,080 $1,103 $20 0 $18 0 $115 $113 $16 0 Advantage $14 0 $12 0 $10 0 $80 $60 % margin $40 $20 10.6% 10.2% $- Q4'23A Q4'22A Q4'23A Q4'22A Y/Y growth (9%) (1)%1 Y/Y growth (12%) Sales $2
Slide 21: Non-GAAP Reconciliation (1/6)
Three Months Ended Year Ended Non-GAAP Consolidated December 31, 2023 2022 December 31, 2023 2022 Reconciliation (in thousands) Net income (loss) $ 17,788 $ (1,421,729) $ (60,318) $ (1,377,292) Add: (1/6) Interest expense, net 45,850 40,831 165,802 104,459 Benefit from income taxes (16,573) (156,860
Slide 22: Non-GAAP Reconciliation (2/6)
Three Months Ended Year Ended Non-GAAP Sales Segment December 31, December 31, 2023 2022 2023 2022 (in thousands) Reconciliation Operating income (loss) Add: $ 29,471 $ (1,389,107) $ 38,443 $ (1,323,192) (2/6) Depreciation and amortization 36,791 40,075 154,891 161,385 Impairment of goodwill and ind
Slide 23: Non-GAAP Reconciliation (3/6)
Three Months Ended Year Ended Non-GAAP Marketing Segment 2023 December 31, 2022 2023 December 31, 2022 Reconciliation (amounts in thousands) Operating income (loss) $ 16,721 $ (148,431) $ 37,747 $ (116,214) (3/6) Add: Depreciation and amortization 17,599 19,003 69,806 71,690 Impairment of goodwill a
Slide 24: Non-GAAP Reconciliation (4/6)
Non-GAAP Three Months Ended Year Ended December 31, December 31, Reconciliation 2023 2023 (amounts in thousands) Net cash provided by operating activities $ 58,283 $ 238,995 (4/6) Add (Less): Purchases of property and equipment (16,613) (46,271) Cash payments for interest 56,748 174,767 Cash payment
Slide 25: Non-GAAP Reconciliation (5/6)
Non-GAAP Reconciliation December 31, 2023 (5/6) (amounts 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
Slide 26: Non-GAAP Reconciliation (6/6)
(1) Represents expenses related to (i) equity-based compensation expense associated with grants of Common Non-GAAP 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.
Slide 27: Thank you
Thank you (A) ADVANTAGE SOLUTIONS