To all sides on hold. We do appreciate Please standby. Your program is about to begin. If you need audio assistance during today's program, please press zero. Greetings, and welcome to the Advantage Solutions Inc. fourth quarter and full year 2024 earnings call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question and answer session. To ask a question during the session, If anyone should require operator assistance during the conference, please press As a reminder, this conference is being recorded. It is now my pleasure to introduce Ruben Mella, Vice President of Investor Relations. You, Ruben. You may begin.

Thank you, operator. Welcome to Advantage Solutions Inc. fourth quarter and full year 2024 earnings conference call. Dave Peacock, Chief Executive Officer, Chris Growe, Chief Financial Officer, and Sean Choksi, Senior Vice President of Strategy and M&A are on the call today. Dave and Chris will provide their prepared remarks after which we will open the call for a question and answer session. During this call, management may make forward-looking statements within the meaning of the federal securities laws. Actual outcomes and results could differ materially due to several factors including those described more fully in the company's annual report on Form 10-K filed with the SEC. All forward-looking statements are qualified in their entirety by such factors. Our remarks today include certain non-GAAP financial measures, which are reconciled to the most comparable GAAP measures in our earnings release. As a reminder, unless otherwise stated, financial results discussed today will be from continuing operations. Our discussion about revenues will exclude pass-through costs and a deconsolidation of the European joint venture, which happened during the fourth quarter of 2023. And now, I would like to turn the call over to Dave Peacock.

Thanks, Ruben. Morning, everyone, and thank you for joining us. Before we get started, I want to thank my teammates for their hard work and dedication this past year. I am proud of how our team served our thousands of clients and each other in a challenging year. In 2024, we made solid progress on our multiyear transformation making strides to improve our operating efficiency while strengthening our business. These efforts have endured during a difficult macro environment and we continue to position ourselves for long-term profitable growth. I'm encouraged by our progress as well as the caliber and resilience of our team. Focusing on results first, our fourth quarter revenues of $762 million were down 3% compared to the prior year, while adjusted EBITDA was up 9% to $95 million as we realized the benefits of more cost discipline and efficiency across our business. For the full year 2024, our revenues of $3 billion were flat versus the prior year, and our adjusted EBITDA reached $356 million which was up 1% and in line with our expectations given broader market trends and transformation investments. It is also important to note that we had a nearly 2% drag on revenues in the fourth quarter and full year related to intentional client exits. Starting with some observations on the macro environment in 2024, we saw a significant increase in value-seeking shopping behavior. Club stores and mass merchandisers benefited from cost-conscious consumers at the expense of regional grocery and other channels where we and others in our industry have significant exposure. While a tighter labor market and wage growth supported overall consumer resiliency, spending behavior became increasingly challenging. Particularly at low-income levels. Furthermore, consumer debt levels continue to rise, which could pressure spending habits further in 2025. CPG companies and retailers have…

Thank you, Dave, and welcome to all of you joining the call today. I will focus my remarks on our full year 2024 performance in branded, experiential, and retailer services. Cover our capital structure, discuss our 2025 guidance. Let's start with brand services. Market headwinds most impacted branded services. As a result, 2024 revenues were down by approximately 4% to $1.1 billion. Adjusted EBITDA was $181 million down 11% margins declined by 90 basis points. The reorganization and restructuring actions taken to adapt to soft market conditions, resulted in significant expense reduction recognized in the fourth quarter. And were the driver for the strong quarterly performance as referenced in our supplementary slides. We continue to be cautious about and reactive to market dynamics in the near term. Experiential services delivered strong results, with full year revenues of $945 million an increase of approximately 11%. Adjusted EBITDA was $76 million a 43% increase and margins expanded 180 basis points to 8%. The drivers included a nearly 10% increase in events per day, and an execution rate of approximately 92%. The base business in traditional sampling performed well and benefited from the ramp-up of activity with a large retailer we announced early last year but at a slower than expected rate. As Dave mentioned, our pricing discipline helped us navigate wage inflation increased operating efficiency through better talent deployment. In the fourth quarter, the softer performance was due to a client loss and one-time expenses. Retailer services navigated through the market headwinds with strong execution. Full year revenues were $965 million a 2% decline, while adjusted EBITDA was $99 million, up approximately 3%. And margins expanded by 50 basis points to over 10%. The revenue decline was driven by market softness in the regional grocery channel, and the intentional decision to exit…

Thanks, Chris. I'm pleased with the progress we made in 2024 on our multiyear transformation. We continue to improve our operating efficiency, strengthening our business fundamentals. In 2025, we remain focused on these initiatives and are confident they are enabling our position as the cost-leading provider of choice for customers. While the climate for CPGs and retailers remains uncertain, we are excited by the prospect of helping them achieve their goals with tailored labor solutions in a challenging time. We will continue to maintain our financial rigor and cost discipline with a focus on improving our cash generation in years to come and we are confident in our path to achieve accelerated, sustainable, long-term growth. Operator, we are now ready for questions.

Thank you. And we will now be conducting a question and answer session. May press two if you would like to withdraw your question. For participants using One moment while we poll for questions. Take from Joseph Vafi from Canaccord. Please go ahead.

Hey, guys. Good morning. Thanks for the opportunity to ask a couple of questions here. Maybe we just start a little bit on maybe the macro environment, tariffs, etcetera, kinda what you're seeing here real-time. I know we got some commentary on the macro already, but maybe a little bit more on it. Thanks.

Thanks, Joe, and thanks for joining early out west. I know it's an early call. You know, I think if anything, it's generating uncertainty in the market. Which is a word you're probably seeing a lot. You know, obviously, we saw yesterday that there may be some scaling back of some of the items that are gonna see tariffs at least until April. And so the kinda on-again, off-again nature of the tariffs really for some companies and some categories that we work with, sort of frozen people. A little bit as far as next steps and what they wanna do relative to their business. I think most are in a wait-and-see mode given that And I do think there's only, you know, certain categories that are significantly affected. But because of you know, brand interactions, product interactions, category interactions, you will see an impact across the store. We've seen estimates between $1,200 and $2,000 per year in incremental cost to the average, US household. And obviously, some of that falls into the categories that we represent. You know, for us, you know, we are paid in parts of our business based on commission. So if pricing flows through, you can see increased commissions coming your way, but you obviously have that last and volume declines. You could see supply chains disrupted a bit, which our retail merchandising teams would probably see greater kinda need for their services. When you have disruptive supply chains, making sure there's product on shelf is pretty important. And so those are just a few examples of what you could see if these tariffs are both imposed and imposed over a prolonged period of time. But at this point, I think it's anyone's guess as to this is gonna play out.

Sure. Thanks for that color, Dave. And then maybe just another kinda high-level one in kind of, you know, is this the kind of environment that you think that you know, new logo wins are achievable or is that really more in a growth environment where you know, maybe there's, you know, more appetite and more demand for services. Thanks a lot.

Thanks, Joe. Yeah. I think it's really both. Right? You know, we've got an aggressive business development effort and some new leadership and structure and process in that group. Over the that was put in place with the last year. And really, really excited about the pipeline that we have. As it relates to new logos. And then on just the services side, there is an opportunity, and I'd say if you look across our segments, know, within the retailer services space, we're doing a lot to bump out incremental services that we can provide retailers in a constrained labor market. You know, the job support just came out and shows still pretty healthy hiring. I think that we're all kind of waiting for the significant softening in the labor market, which is likely to come. And it was a little softer than people expected. But I think there's services that we can provide at, you know, a really lower cost because of the scale manner and efficiency in which we do them. They can really benefit retailers. So you know, we're exploring a lot of opportunities in that space. And then if you look at our experiential services space, it's similar. You know, there's other forms beyond in-store sampling of product demonstration and product sampling that we are moving into and seeing know, pretty healthy demand for. And then on the branded services space, I mentioned that the retail merchandising side of the business, you know, on behalf of CPGs, is an area where there's real opportunity especially when you've got any disruption to supply chains, and or, you know, significant growth especially from kind of mid-size or emerging brands.

Great. Thanks for that commentary, Dave. Much appreciated. We'll take our next question from Greg Parrish with Morgan Stanley. Proceed with your question.

Yeah. Hey, thanks. Good morning, guys. And congrats on the full year result. Maybe just start on Brandon. This one unpack a little bit. Some of the headwinds going on, gross sold a little bit in the quarter. You expect those to persist in the first quarter. So what's the right way to think about 2025 given the headwinds in the market right now? I mean, down low single-digit revenue growth, the right kind of framework, or similar to 2024, just help us kinda sort of flesh out what to expect in 2025.

Thanks, Greg. And you're talking to the branded services segment, specifically. Yeah. Yeah. Exactly. Yeah. Yeah. I think you know, some of your assessment is correct. We obviously did get down a guide by segment, but you know when everybody's watching and for instance, paid attention to what happened with the CAGNY most recently, but also other reports from consumer product companies. I'd say it's kind of a sanguine environment relative to outlook. And a little bit of the uncertainty we just talked about as it relates to tariffs. Because depending on the category you're competing in, you could be realizing some pretty significant input costs You obviously have the really what I call the uncertainty that comes with GLP one. Drugs and GLP one drug adoption. We know that that can impact household spending on group food as much as, you know, 6%, higher income households even more. The question is, what's the adoption curve and how long are people gonna stay on those drugs and how long does that pattern persist. We know it's a the kind of single-digit percentage of the population right now, but recently it came out that those drugs are gonna become a little less expensive too. So we have to watch that closely. So all of these things suggest, you know, a lot of uncertainty for the consumer's sake. That said, you know, I think some of this will depend on our ability to generate new business through logos, growth, and incremental services. Provided. We do have clients who are leaning into some of the things that we provide. I mentioned the retail merchandising side, some of the things we do for them on the e-commerce side as that continues to be you know, a growth area for retail. So we're optimistic. We're kinda placing our energy and bets against the areas where we think we can provide cost efficiency for them and improvement in operations based on the current uncertain environment.

Yeah. That's a helpful color. And then maybe rolling that into the 2025 guide. Is how do we think about it in, like, you know, how conservative this is or vice versa Right? You have these headwinds that are persisting in one q. So does your guidance contemplate the market getting better after the first quarter here? Or would you be able to hit your EBITDA guide, you know, even if these headwinds that we're currently seeing sort of persist through the year?

Yeah. We when we book form the guidance, we obviously did so kinda eyes wide open to the existing environment. I would say tariffs and how those play out are probably the thing that are the most difficult to predict. But I mentioned there's some things that you know, we can capitalize on in an environment where you've got tariffs or even uncertainty around tariffs. But that's probably the thing that is the most difficult to determine or estimate also looking forward. I'd say, you know, one way to look at it in simple terms is we're making great progress on transformation. We started two years ago. We focused first on team building for leadership. Diagnosing the opportunities that we had in business and where we had a right to win. We quickly then tried to simplify to resegment Obviously, with the vestitures we've talked to you guys about over the last couple of years, get the portfolio right, get the structure right, and some of the processes right. And this year is a big year of system implementation. It started as late as last year, but a lot of the kind of investment around system implementation is hitting in 2025. So you know, but for some of the increase in both technology spend to get more modern systems, more reliable systems, more stable systems, and data investment, because we have invested in getting better, more granular data faster into the hands of our key account managers. If you exclude those, we would be kinda more in the mid-single-digit growth rate. So we actually feel like the fundamentals of the business are pretty strong. And it's Chris alluded to in his comments, from a cash flow standpoint, we have some unique one-time items that you know, if they didn't exist, we'd be seeing your unlevered free cash flow and that free cash flow kinda more in line with what we would expect. In this business. So we have an investment year. We're coming upon, I'd say, the end of what I'll call the heavy investment and effort around transformation. And we are gaining a positive outlook. And to the degree, the markets can stabilize and get back to more of a historical growth rate, we think we're ready to meet that growth. And is a much kinda more lean and cost-efficient company.

Great. Yeah. I think that's super helpful color. And maybe one more final one for me. You know, on a client exits, do you anticipate any further client exits that you know, intentionally on your part in 2025? Is there any of those in the road map?

No. I don't think so. Not that I can think of. No. We had a couple of unique circumstances We've worked through those. We're still kinda feeling those facts a little bit into the first quarter of 2025. Is just from a lapping standpoint. But, no, we don't anticipate any intentional client exits as we move into 2025.

Okay. Great. Fantastic. Thank you, guys.

Thank you.

Thank you. And there are no further questions at this time. I would like to turn the call back over to Dave Peacock for closing remarks. Please go ahead.

Well, we thank you all for joining. Know, it's early on a Friday, so we appreciate the time and attention on our business, and we look forward to talking to you in the first quarter. Thank you.

This concludes today's teleconference. You may disconnect your lines at any time. Thank you for your participation.