Slide 1: Advantage Solutions Inc. Investor Presentation | May 2023
Advantage Solutions Inc. Investor Presentation | May 2023 NASDAQ: ADV
Slide 2: Disclaimer: Forward-Looking Statements
Disclaimer Forward-Looking Statements Certain statements in this presentation 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. Forward-looking statements generally r
Slide 3: Investment Highlights
Investment Highlights Market leader in outsourced sales and marketing services industry for CPG brands and retailers Large, growing $10B+ total addressable market, anchored by growing retail food industry Diverse range of long-standing blue-chip customers with excellent retention Multiple sticky rev
Slide 4: Company Snapshot
Brands Retailers Company Snapshot 20 20 20 20 Advantage Solutions’ sales and retailer services help brands and retailers of all sizes get the right products on the shelf, whether physical or digital. Our marketing teams influence shoppers to buy those products, wherever and however they shop. 3,500+
Slide 5: The basics: What Advantage Does
The basics: 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 Headquarter Sales Present to retailers the business case to grow client’s product distribution i
Slide 6: Advantage's Two Operating Segments
Advantage’s Two Operating Segments Sales Segment $2.5B (61% of Revenues) Leader in experiential marketing and critical in-store and online sampling programs Agency of record for many of the most recognized brands across the retail, packaged goods, technology, and hospitality industries Revenues gene
Slide 7: Sales Segment
Retail and Sales Analytics Supply Chain Analytics Category Management Space Management Customer Alignment and Partnership New Item Pitches Pricing, Promotion, and Sales Execution Sales Segment Leader in sales and merchandising services with 20%+ market share Primary Sales Segment Services HEADQUARTE
Slide 8: Marketing Segment
Marketing Segment Leading promotions and experiential/event agency in U.S. Planning and Execution Account-Specific Omnichannel Activation National Consumer Promotions Sampling and Demonstrations Festivals and Mobile Tours Logistics and Fulfillment Assisted Selling In-Store, Online, Brand, and Retail
Slide 9: Long-term clients drive recurring revenue streams
Client Description Length of Relationship (years) Service Offering Client Length of Relationship Sales Marketing 25+ 25+ 25+ 25+ 25+ 25+ 20+ 20+ Client Description Length of Relationship (years) Service Offering Client Length of Relationship Sales Marketing 25+ 25+ 25+ 15+ 15+ 10+ 10+ 10+ LONG-TERM
Slide 10: Organic revenue growth
organic Revenue growth $ in millions Total Advantage Sales Segment Marketing Segment 12% 8% 11% 7% 7% 2% 21% 9% 29% % Y/Y organic growth % Y/Y organic growth % Y/Y organic growth 11% 4% 23% Presented net of foreign exchange impact.
Slide 11: Pricing overview
Pricing overview Commission-Based Sales – CPG product inflation generates commission lift to offset associated white collar wage inflation Cost-Plus Arrangements – Immediately pass-through wage inflation in price Sampling / Demonstration – Recoup wage inflation quickly; work and negotiate with retai
Slide 12: Customer Case Study: Maruchan
Customer Case Study: MARUCHAN For 20+ years, Advantage has evolved and grown with Maruchan NATIONAL SALES AGENCY MARKETING AGENCY Maruchan sought to grow sales and become the dominant ramen choice in the U.S. SITUATION ACTION Maruchan was looking to reach new audiences after sales began to plateau.
Slide 13: Proven Track Record Across Economic Cycles
Proven Track Record Across Economic Cycles 2008 – 2010 Revenue CAGR: 9.6% Adjusted EBITDA(1): 11.8% 15.8% 16.1% 17.8% 16.7% 17.5% 17.5% 17.4% 19.1% 19.3% 19.6% 18.2% 12.7% 13.3% 15.4% 14.5% Daymon Acquisition in December 2017 Revenue CAGR: 10.5% Adj. EBITDA CAGR(1): 7.7% Great Recession COVID-19 Pan
Slide 14: 2018-2022 Performance Trends
13% % margin % margin Y/Y growth Y/Y growth Y/Y growth Y/Y growth $ in millions. $ in millions. Revenues Adjusted EBITDA 8% 2018-2022 Performance Trends 17% 21% 1% (19)% 24% (10)% 15.4% 5% 5% 16% 5% (40)% (1)% (35)% 11% 14% % margin 12% 7% (16)% (17)% 2% (3)% 7% Y/Y growth Y/Y growth Total Advantage
Slide 15: Q1 Financial Results
Total Advantage Sales Segment Marketing Segment Q1 Financial Results (5)% (4)% (8)% 11% 4% 23% Note: Please see the appendix for a reconciliation of non-GAAP financial measures to most directly comparable GAAP measures. Totals may not add due to rounding. Revenues Adjusted EBITDA Y/Y growth Y/Y grow
Slide 16: Asset-Light Business
Asset-Light Business Advantage differentiated from peers / industry participants due to limited capital intensity (2022 Adj. EBITDA – 2022 Capex) / 2022 Adj. EBITDA 2022 Capital Expenditures to Sales Note: Cash Flow Conversion defined as (Adj. EBITDA – Capex) / (Adj. EBITDA); Capital Expenditures to
Slide 17: Free Cash Flow Overview
Free cash flow Overview Generated $69M / $47M of unlevered / levered cash flow in Q1’23 Adj. EBITDA – Capex Adj. Levered Free Cash Flow Adj. EBITDA Adj. Unlevered Free Cash Flow $: $92M $85M $69M $47M %: 100% 92% 75% 51% Note: Adj. EBITDA, Adj. Unlevered Free Cash Flow, and Adj. Levered Free Cash fl
Slide 18: Capital Allocation Priorities
Capital Allocation Priorities Investing in recruiting and retention given challenging labor environment Focus on executing critical activities within core business to improve infrastructure and grow Enhance analytic support for HQ Sales and enhance technology for Retail teams Opportunistically repur
Slide 19: Debt and Capitalization Summary
Total Debt of $2.1 billion(1) Leverage at around 4.5x net debt(1) to LTM March Adjusted EBITDA No meaningful maturities for the next 4 years Debt Capitalization: Equity capitalization as of March 31, 2023: 323,555,298 Class A Common shares outstanding 1,610,014 Treasury shares 18,578,321 Warrants wi
Slide 20: Appendix & Non-GAAP Reconciliation
Appendix & Non-GAAP Reconciliation
Slide 21: Non-GAAP Reconciliation (1/7)
Non-GAAP Reconciliation (1/7) Year Ended December 31, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Company (in thousands) (Unaudited)(11) (Unaudited)(11) Net income (loss) $ 5,790 $ (201,052) $ 20,622 $ (34,984) $ (24,442) $ 4,253 $ 35,072 $ (98,984) $ 24,886
Slide 22: Non-GAAP Reconciliation (2/7)
Non-GAAP Reconciliation (2/7) Three Months Ended March 31, June 30, September 30, December 31, March 31, 2022 2022 2022 2022 2023 Total Company (in thousands) Net income (loss) $ 17,534 $ 3,676 $ 23,227 $ (1,421,729) $ (47,678) Add: Interest expense, net 11,883 28,188 23,557 40,831 47,191 Provision
Slide 23: Non-GAAP Reconciliation (3/7)
Non-GAAP Reconciliation (3/7) Three Months Ended March 31, June 30, September 30, December 31, March 31, 2022 2022 2022 2022 2023 Sales Segment (in thousands) Operating income (loss) $ 18,973 $ 15,177 $ 31,765 $ (1,389,107) $ (4,146) Add: Depreciation and amortization 40,969 40,543 39,798 40,075 39,
Slide 24: Non-GAAP Reconciliation (4/7)
Non-GAAP Reconciliation (4/7) Year Ended December 31, 2018 2019 2020 2021 2022 Sales Segment (in thousands) Operating (loss) income $ (1,072,702) $ 127,961 $ 63,305 $ 182,529 $ (1,323,192) Add: Depreciation and amortization 157,098 161,563 171,569 170,076 161,385 Impairment of goodwill and indefinit
Slide 25: Non-GAAP Reconciliation (5/7)
Non-GAAP Reconciliation (5/7) Three Months Ended March 31, 2023 (in thousands) Net cash provided by (used in) operating activities $ 43,086 Add (Less): Purchase of property and equipment (7,278) Cash payments for income taxes 3,880 Cash paid for acquisition-related expenses(10) 1,208 Cash paid for r
Slide 26: Non-GAAP Reconciliation (6/7)
Non-GAAP Reconciliation (6/7) (in millions) March 31, 2023 Current portion of long-term debt $ 15.1 Long-term debt, net of current portion 2,018.8 Less: Debt issuance costs (40.3) Total Debt 2,074.2 Less: Cash and cash equivalents 149.1 Total Net Debt $ 1,925.1
Slide 27: Non-GAAP Reconciliation (7/7)
Non-GAAP Reconciliation (7/7) Note: Numerical figures included in this slide have been subject to rounding adjustments 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