Good afternoon and welcome to Advantage Solutions, Fourth Quarter and full-year 2021 Earnings Conference Call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Dan Riff, Chief Investor Relations and Strategy Officer for Advantage. Thank you. You may begin.

Thank you, Operator. Thank you, everyone for joining us on Advantage Solutions 2021, Fourth Quarter Earnings Conference Call. On the call with me today are Tanya Domier, Chief Executive Officer, Brian Stevens, Chief Financial Officer and Chief Operating Officer. Jill Griffin, President and Chief Commercial Officer, and Dan Morrison, our Senior Vice President of Finance and Operations. During this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and involve risks and uncertainties that could differ materially from actual events and those described in the forward-looking statements. Forward-looking statements are based on the company's current expectations and are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially due to a number of factors, including those described more fully in the sections titled Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operation, and elsewhere in the company's filings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by such factors. The company does not undertake any duty to update any forward-looking statements, except as required by law. Please note management's remarks today will highlight certain non-GAAP financial measures. Our earnings release issued earlier today presents reconciliations of these non-GAAP financial measures to the most comparable GAAP numbers, which can be found on the Investors section of our website at https//advantagesolutions.net. The company has also prepared presentation slides, which are posted on Advantage's investor Relations website. You may want to refer to the slides during today's call. This call is being webcast and a recording of this call will also be available on the website. And now I'd like to turn the call over to Tanya Domier.

Thanks Dan, and good afternoon everyone. As I'm sure most of you have seen by now, we put out a press release today announcing that after more than three decades at Advantage and almost ten years as CEO, I've decided it's time for need to transition to an Executive Chair role and pass the baton to the next-generation of amazing leadership at our company. The plan that we shared is the result of multiple years of succession planning with the board and I couldn't be more excited to share that Jill Griffin, our President and Chief Commercial Officer, will become our next CEO. Jill is a proven leader and she knows how to create value. She's a champion of Advantage culture and values. She joined Advantage 14 years ago, and soon after replaced me as the leader of our marketing division, which she quickly incompetently grew into a multi-billion-dollar business. She has been my partner in building the business for over a decade. And I can't think of a better person to write the next chapter of the Advantage story. It's been extremely rewarding to see her grow as a leader throughout her career and with Jill at the helm, I am grateful knowing that I leave this business in better and more capable hands and I am confident that under her leadership, the best is yet to come for Advantage. When I transition to the Executive Chair role on April 1, I'll serve on the Board of Directors, and I will continue to support Jill and the team as they build the business. I won't take any more time to discuss this announcement on this call, but I hope that you'll read our press release and I also hope that you'll read my letter to associates that's posted in…

Thank you, Tanya. And good afternoon, everyone. It's great to be speaking with you. Tanya touched on the fourth-quarter and full-year highlights, so I'll share a bit more color at the segment level. In Q4, sales segment revenue of $631 million was up 15% year-on-year. Segment EBITDA of $94 million was up 5% year-on-year. Marketing segment revenue of $402 million was up 34% year-on-year, segment EBITDA of $60 million was up 39% year-on-year. Breaking down the drivers of our revenue growth in Q4, about 40% came from growth in sampling and demonstration, another 20% came from market growth and share gains in our high performing retail merchandising services, including an acquisition that we made in September, and continued digital gains drove another 12% of our growth. And drilling a bit further into the drivers of our EBITDA growth in Q4, marketing gains drove just over three quarters of the year-on-year adjusted EBITDA growth, lower performance-based compensation, profit recovery in sampling and demonstration, and solid incremental margin in digital services drove marketing profit growth in the quarter. On the sales side, international profits and lower performance-based compensation more than offset adjusted EBITDA headwinds in our headquarter, retail, and Foodservice areas. Turning to full-year 2021, sales segment revenue of $2.324 billion was up 13% year-on-year. Segment EBITDA of $363 million was up 1% year-on-year. Marketing segment revenue of $1.278 billion was up 17% year-on-year. And segment EBITDA of $158 million was up 24% year-on-year. As we suggested, full-year adjusted EBITDA margins, land squarely between 2019 pre - COVID levels and 2020 elevated levels. Breaking down the drivers of our revenue growth in 2021, 25% came from strong year-on-year gains of our high-margin, high-return digital service and solutions. Just under 30% came from marketing growth in share gains in our high performing retail…

Thanks, Brian. We're proud of how we navigated a tumultuous 2021, and we're excited about our plans to invest in both renovation and innovation in 2022 and beyond. As a team, we've grown this business through seismic shifts and meaningful challenges and our 2022 adjusted EBITDA guidance gives us a healthy pool of funds to generate attractive returns width and a very strong foundation that we can compound from. We're grateful for your interest and your support as owners and prospects and we're eager to share more thoughts and perspectives and insights today and also in coming days and much more deeply in a future Analysts Day. Dan, any closing thoughts before we open it up for Q&A?

Thanks, Tanya. As many of you know, ADV shares have been weighed down by tough performance across the vast majority of recent leasebacks. We're also not blessed with a readily accessible universal public comparable or abundant share liquidity. But we do have a long term history of value creation, a high growth, high returns sets of of digital services that are accelerating out of COVID, and a thoughtful plan to reinvest in labor, innovation, and renovation to accelerate our sustainable growth rate, expand our margins, and boost our returns from here. And that attractive profile is trading inside of nine times, a conservative adjusted EBITDA guidance level, and at a mid-to-high single digit equity free cash flow yield. I like the asymmetry as an owner and as an operator at Advantage. With that, I'd now like to ask the Operator to open the call for questions.

We will now begin the question-and-answer session. [Operator Instructions] If you are using a speaker phone, please pick up your handset before pressing the keys. [Operator Instructions] At this time, we will pause momentarily to assemble our roster. Our first question comes from Jason English with Goldman Sachs. Please go ahead.

Hey, good morning, folks. Thanks for slotting me in, and Tanya, congratulations on a longer lustrous career there, and I'm going to sorely miss working with you on a regular basis or at least having our colorful conversations quarterly.

Me too.

I don't know if Jill's there, but if she is, congrats, Jill, on the new elevated employment, well-earned, well-deserved.

Thank you so much.

Jill, now that I definitively know you are there. We got a new guidance out today, it's been delivered by Tanya. Do you feel ownership in this guidance for fiscal '22?

I do, fully.

Now to help me understand some of the puts and takes, you gave three buckets for the reason why the EBITDA is lower than certainly you would expect it collectively many months ago, and something we had expected talent, innovation, renovation. Talent and renovation don't sound like high return investments, they sound like rebased cost to compete to me. Am I wrong in that? And innovation sounds like it could be the area where you could actually get some positive return. How much of that investment is going into innovation?

I'm assuming Tanya, you want me to take this? I'll jump right in and give my perspective and then Dan, I'm going to ask you to step in when we get to what we can say about quantifying or not, but Jason, I'll just address generally the strategy going forward, which echoes a lot of what Tanya has already shared. For sure, there is a bucket of this that is defense and a bucket that is offense, and you're seeing the wage pressure, the supply chain, the inflation that we are facing. And it is absolutely a challenge, but I also want to say that managing labor has always been a primary strength of our business and it's why the largest brands and retailers outsourced to us over time. So while we actually need to increase wages we're very confident in the strategies that we have in place to drive efficiencies, new systems, structures, talent sharing, as well as take price to work on that. So you're right in that. That isn't a future growth bucket of investment, it is a required investment given the headwinds we're all facing and we feel really confident in our strategies to address it. Now turning over to the innovation, we have still many great seeds that we have planted both pre -pandemic and during the pandemic that now we are going to lean into. These are new category adjacencies, a lot of the areas that we've been talking about with you over the last couple of years in E-commerce and data, tech, and retail media, and we are very excited about being able to lean in harder now that we're coming out of some of the daily urgencies that the pandemic was driving our focus on.

And let me come back with I guess one more. A lot of these seem like things that you would hope that you could price for., but I'm cognizant that this seems like almost an every couple of year type event where something happens in the marketplace that causes your profitability to be rebased lower. Whether it'd be pressure from the manufacturing community on one era, whether it be pressure from Walmart, or the bill that they gave you and your need to address that through acquisition or now labor cost. All of them have resulted in a reset low on profitability that you've been unsuccessfully able to pass through or price to. Is there any reason to believe that this is different, that this isn't just a structural reset that in the end you're not going to be able to price for this. This is a lower enduring profitability level for the business.

So I think, Jason, those are really good questions and we know that the labor markets are as tough as they've ever been and we are raising wages in an incredibly competitive market. And I think if you look to last year and you look at how we were able to take price, we just have not been able to take it fast enough because we have to invest ahead of price. So where does this settle out? Your guest is as good as ours. All we know is we've evolved with the business. We've been able to take value in the business. If you look at what we've been able to do in the sales business during COVID and increase our margins through digital services, return now a quarter of our profit. All of those things are very Important because they show our ability to evolve. Will there be things that come up in the market from pricing to retailer programs? Yes, they will. But specifically, when we're talking about investing in talent, we actually think it does have good returns and we believe we will be able to price over time but we're giving ourselves that room. And that's why we've taken guidance down because there are a lot of uncertainties in wage and it's been really hard to get it right. But talent is our most valuable asset and we have been able to earn on that over time. So is it easy? No. Is it dynamic? Yes. But we're going to keep doing what we do, which is invest to grow.

Understood. Thank you very much. I'll pass it on.

Again. If you have a question, [Operator Instructions] please standby as we pull for questions. Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Tanya Domier for any closing remarks.

Thank you all very much for your participation and for listening to us today, and we look forward to following up with you in our sessions. Have a great night, take care.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.