QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company |
Page |
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3 |
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4 |
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5 |
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7 |
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8 |
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25 |
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49 |
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50 |
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53 |
||||
53 |
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54 |
||||
54 |
||||
54 |
||||
54 |
||||
54 |
||||
55 |
||||
56 |
June 30, |
December 31, |
|||||||
(in thousands, except share and per share data) |
2021 |
2020 |
||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Accounts receivable, net of allowance for expected credit losses of $ |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Investments in unconsolidated affiliates |
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Other assets |
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Total assets |
$ | $ | ||||||
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|
|||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities |
||||||||
Current portion of long-term debt |
$ | $ | ||||||
Accounts payable |
||||||||
Accrued compensation and benefits |
||||||||
Other accrued expenses |
||||||||
Deferred revenue |
||||||||
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|||||
Total current liabilities |
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Long-term debt, net of current portion |
||||||||
Deferred income tax liabilities |
||||||||
Warrant liability |
||||||||
Other long-term liabilities |
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Total liabilities |
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Redeemable noncontrolling interest |
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|
|
|
Equity attributable to stockholders of Advantage Solutions Inc. |
||||||||
Preferred stock, |
||||||||
Common stock, $ |
||||||||
Additional paid in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Loans to Karman Topco L.P. |
( |
) | ( |
) | ||||
Accumulated other comprehensive (loss) income |
( |
) | ||||||
|
|
|
|
|||||
Total equity attributable to stockholders of Advantage Solutions Inc. |
||||||||
Nonredeemable noncontrolling interest |
||||||||
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|
|||||
Total stockholders’ equity |
||||||||
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|
|||||
Total liabilities, redeemable noncontrolling interest, and stockholders’ equity |
$ | $ | ||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands, except share and per share data) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenues |
$ | $ | $ | $ | ||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
||||||||||||||||
Selling, general, and administrative expenses |
||||||||||||||||
Recovery from Take 5 |
— | ( |
) | — | ( |
) | ||||||||||
Depreciation and amortization |
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|||||||||
Total operating expenses |
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|||||||||
Operating income |
||||||||||||||||
Other (income) expenses: |
||||||||||||||||
Change in fair value of warrant liability |
( |
) | — | ( |
) | — | ||||||||||
Interest expense, net |
||||||||||||||||
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|
|
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|
|||||||||
Total other (income) expenses |
||||||||||||||||
Income (loss) before income taxes |
( |
) | ( |
) | ||||||||||||
Provision for (benefit from) income taxes |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
( |
) | ( |
) | ||||||||||||
Less: net loss attributable to noncontrolling interest |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) attributable to stockholders of Advantage Solutions Inc. |
( |
) | ( |
) | ||||||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive income (loss) attributable to stockholders of Advantage Solutions Inc. |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per common share: |
||||||||||||||||
Basic |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
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|
|
|
|
|
|
|||||||||
Weighted-average number of common shares: |
||||||||||||||||
Basic |
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|
|||||||||
Diluted |
||||||||||||||||
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|
|
|
Accumulated |
Advantage |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional |
Loans |
Other |
Solutions Inc. |
Nonredeemable |
Total |
||||||||||||||||||||||||||||||
Paid-in |
Accumulated |
to |
Comprehensive |
Stockholders’ |
Noncontrolling |
Stockholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Topco |
Income (Loss) |
Equity |
Interests |
Equity |
||||||||||||||||||||||||||||
(in thousands, except share data) |
||||||||||||||||||||||||||||||||||||
Balance at April 1, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
Net (loss) income |
— |
— |
— |
— |
— |
( |
) |
|||||||||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total comprehensive income (loss) |
( |
) |
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Loans to Karman Topco L.P. |
— |
— |
— |
— |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Redemption of noncontrolling interest |
— |
— |
( |
) |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||
Equity-based compensation |
— |
— |
( |
) |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Shares issued upon vesting of restricted stock units |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Shares issued upon exercise of warrants |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Stock-based compensation expense |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
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|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
| |||||||||
Accumulated |
Advantage |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional |
Loans |
Other |
Solutions Inc. |
Nonredeemable |
Total |
||||||||||||||||||||||||||||||
Paid-in |
Accumulated |
to |
Comprehensive |
Stockholders’ |
Noncontrolling |
Stockholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Topco |
Income (Loss) |
Equity |
Interests |
Equity |
||||||||||||||||||||||||||||
(in thousands, except share data) |
||||||||||||||||||||||||||||||||||||
Balance at A pril 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive loss |
||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
( |
) |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Total comprehensive loss |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||
Loans to Karman Topco L.P. |
— |
— |
— |
— |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Equity-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
Advantage |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional |
Loans |
Other |
Solutions Inc. |
Nonredeemable |
Total |
||||||||||||||||||||||||||||||
Paid-in |
Accumulated |
to |
Comprehensive |
Stockholders’ |
Noncontrolling |
Stockholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Topco |
Income (Loss) |
Equity |
Interests |
Equity |
||||||||||||||||||||||||||||
(in thousands, except share data) |
||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
$ |
||||||||||||||||||||||||
Comprehensive loss |
||||||||||||||||||||||||||||||||||||
Net income (loss) |
— |
— |
— |
— |
— |
( |
) |
|||||||||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total comprehensive loss |
( |
) |
||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Loans to Karman Topco L.P. |
— |
— |
— |
— |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Redemption of noncontrolling interest |
— |
— |
( |
) |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||||||||
Equity-based compensation |
— |
— |
( |
) |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Vesting of stock-based compensation awards |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Shares issued upon vesting of restricted stock units |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||
Shares issued upon exercise of warrants |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||
Stock-based compensation expense |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
|
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|
|
|
|
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|
|
|
|
|
|
|
|
| |||||||||
Accumulated |
Advantage |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional |
Loans |
Other |
Solutions Inc. |
Nonredeemable |
Total |
||||||||||||||||||||||||||||||
Paid-in |
Accumulated |
to |
Comprehensive |
Stockholders’ |
Noncontrolling |
Stockholders’ |
||||||||||||||||||||||||||||||
Shares |
Amount |
Capital |
Deficit |
Topco |
Income (Loss) |
Equity |
Interests |
Equity |
||||||||||||||||||||||||||||
(in thousands, except share data) |
||||||||||||||||||||||||||||||||||||
Balance at January 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
Comprehensive loss |
||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
( |
) |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
Foreign currency translation adjustments |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||||||
Total comprehensive loss |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Loans to Karman Topco L.P. |
— |
— |
— |
— |
( |
) |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||
Equity-based compensation |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
(in thousands) |
2021 |
2020 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income (loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
||||||||
Noncash interest expense, net |
||||||||
Depreciation and amortization |
||||||||
Change in fair value of warrant liability |
( |
) | — | |||||
Fair value adjustments related to contingent consideration |
||||||||
Deferred income taxes |
( |
) | ||||||
Equity-based compensation of Topco |
( |
) | ||||||
Stock-based compensation |
— | |||||||
Equity in earnings of unconsolidated affiliates |
( |
) | ( |
) | ||||
Distribution received from unconsolidated affiliates |
||||||||
Noncash losses (gains) related to lease abandonments |
( |
) | ||||||
Loss on disposal of property and equipment |
||||||||
Changes in operating assets and liabilities, net of effects from purchases of businesses: |
||||||||
Accounts receivable |
( |
) | ||||||
Prepaid expenses and other assets |
||||||||
Accounts payable |
( |
) | ||||||
Accrued compensation and benefits |
( |
) | ( |
) | ||||
Deferred revenues |
||||||||
Other accrued expenses and other liabilities |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Purchase of businesses, net of cash acquired |
( |
) | ( |
) | ||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Borrowings under lines of credit |
||||||||
Payments on lines of credit |
( |
) | ( |
) | ||||
Proceeds from accounts receivable securitization facility |
— | |||||||
Proceeds from issuance of long-term debt |
— | |||||||
Principal payments on long-term debt |
( |
) | ( |
) | ||||
Contingent consideration payments |
( |
) | ( |
) | ||||
Holdback payments |
( |
) | — | |||||
Redemption of noncontrolling interest |
( |
) | — | |||||
Net cash (used in) provided by financing activities |
( |
) | ||||||
Net effect of foreign currency fluctuations on cash |
( |
) | ( |
) | ||||
Net change in cash, cash equivalents and restricted cash |
( |
) | ||||||
Cash, cash equivalents and restricted cash, beginning of period |
||||||||
Cash, cash equivalents and restricted cash, end of period |
$ | $ | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION |
||||||||
Purchase of property and equipment recorded in accounts payable and accrued expenses |
$ | $ | ||||||
Note payable related to settlement of contingent consideration |
$ | — | $ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Sales brand-centric services |
$ |
$ |
$ |
$ |
||||||||||||
Sales retail-centric services |
||||||||||||||||
Total sales revenues |
||||||||||||||||
Marketing brand-centric services |
||||||||||||||||
Marketing retail-centric services |
||||||||||||||||
Total marketing revenues |
||||||||||||||||
Total revenues |
$ |
$ |
$ |
$ |
||||||||||||
(in thousands) |
||||
Consideration: |
||||
Cash |
$ | |||
Holdback |
||||
Fair value of contingent consideration |
||||
|
|
|||
Total consideration |
$ | |||
|
|
|||
Recognized amounts of identifiable assets acquired and liabilities assumed: |
||||
Assets |
||||
Accounts receivable |
$ | |||
Property and equipment |
||||
Identifiable intangible assets |
||||
|
|
|||
Total assets |
||||
|
|
|||
Liabilities |
||||
Total liabilities |
||||
Redeemable noncontrolling interest |
||||
|
|
|||
Total identifiable net assets |
||||
|
|
|||
Goodwill arising from acquisitions |
$ | |||
|
|
(in thousands) |
Amount |
Weighted Average Useful Life |
||||||
Client relationships |
$ | |||||||
Trade n ames |
||||||||
|
|
|||||||
Total identifiable intangible assets |
$ | |||||||
|
|
(in thousands) |
||||
Consideration |
| |||
Cash |
$ |
|||
Holdbacks |
||||
Fair value of contingent consideration |
||||
|
|
|||
Total consideration |
$ |
|||
|
|
|||
Recognized amounts of identifiable assets acquired and liabilities assumed: |
||||
Assets |
||||
Accounts receivable |
$ |
|||
Other assets |
||||
Property and equipment |
||||
Identifiable intangible asset s |
||||
|
|
|||
Total assets |
||||
|
|
|||
Liabilities |
||||
Total liabilities |
||||
|
|
|||
Total identifiable net assets |
||||
|
|
|||
Goodwill arising from acquisitions |
$ |
|||
|
|
(in thousands) |
Amount |
Weighted Average Useful Life |
||||||
Client relationships |
$ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands, except per share data) |
||||||||||||||||
Total revenues |
$ |
$ |
$ |
$ |
||||||||||||
Net income (loss) attributable to stockholders of Advantage Solutions Inc. |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
Basic net income (loss) per common share |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
Diluted net income (loss) per common share |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
Sales |
Marketing |
Total |
||||||||||
(in thousands) |
||||||||||||
Gross carrying amount as of December 31, 2020 |
$ | $ | $ | |||||||||
Accumulated impairment charge (1) |
( |
) | — | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Balance at December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
|||||||
Acquisitions |
— | |||||||||||
Measurement period adjustments |
( |
) | ( |
) | ||||||||
Foreign exchange translation effects |
— | |||||||||||
|
|
|
|
|
|
|||||||
Balance at June 30, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
(1) | During the fiscal year ended December 31, 2018, the Company recognized a non-cash goodwill impairment charge of $ |
June 30, 2021 |
||||||||||||||||||
(in thousands) |
Weighted Average Useful Life |
Gross Carrying Value |
Accumulated Amortization |
Accumulated Impairment Charges (1) |
Net Carrying Value |
|||||||||||||
Finite-lived intangible assets: |
||||||||||||||||||
Client relationships |
$ | $ | $ | — | $ | |||||||||||||
Trade names |
— | |||||||||||||||||
Developed technology |
— | |||||||||||||||||
Covenant not to compete |
— | |||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total finite-lived intangible assets |
— | |||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Indefinite-lived intangible assets: |
||||||||||||||||||
Trade names |
— | |||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Total other intangible assets |
$ | $ | $ | $ | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | During the fiscal year ended December 31, 2018, the Company recognized a non-cash intangible asset impairment charge of $ million related to the Company’s sales trade name as a result of the Company’s annual impairment test for indefinite-lived intangible assets. |
December 31, 2020 |
||||||||||||||||||||
(in thousands) |
Weighted Average Useful Life |
Gross Carrying Value |
Accumulated Amortization |
Accumulated Impairment Charges |
Net Carrying Value |
|||||||||||||||
Finite-lived intangible assets: |
||||||||||||||||||||
Client relationships |
$ | $ | $ | — | $ | |||||||||||||||
Trade names |
— | |||||||||||||||||||
Developed technology |
— | |||||||||||||||||||
Covenant not to compete |
— | |||||||||||||||||||
Total finite-lived intangible assets |
— | |||||||||||||||||||
Indefinite-lived intangible assets: |
||||||||||||||||||||
Trade names |
— | |||||||||||||||||||
Total other intangible assets |
$ | $ | $ | $ | ||||||||||||||||
(in thousands) |
||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total amortization expense |
$ | |||
June 30, 2021 |
December 31, 2020 |
|||||||
(in thousands) |
||||||||
New Term Loan Facility |
$ | $ | ||||||
Notes |
||||||||
New Revolving Credit Facility |
— | |||||||
Notes payable and deferred obligations |
||||||||
Less: current portion |
||||||||
Less: debt issuance costs |
||||||||
Long-term debt, net of current portion |
$ | $ | ||||||
June 30, 2021 |
||||||||||||||||
(in thousands) |
Fair Value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||
Assets measured at fair value |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Derivative financial instruments |
— | — | ||||||||||||||
Total assets measured at fair value |
$ | $ | $ | $ | — | |||||||||||
Liabilities measured at fair value |
||||||||||||||||
Derivative financial instruments |
$ | $ | — | $ | $ | — | ||||||||||
Warrant liability |
— | — | ||||||||||||||
Contingent consideration liabilities |
— | — | ||||||||||||||
Total liabilities measured at fair value |
$ | $ | — | $ | $ | |||||||||||
December 31, 2020 |
||||||||||||||||
(in thousands) |
Fair Value |
Level 1 |
Level 2 |
Level 3 |
||||||||||||
Assets measured at fair value |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — | $ | — | ||||||||||
Derivative financial instruments |
— | — | ||||||||||||||
Total assets measured at fair value |
$ | $ | $ | $ | — | |||||||||||
Liabilities measured at fair value |
||||||||||||||||
Derivative financial instruments |
$ | $ | — | $ | $ | — | ||||||||||
Warrant liability |
— | — | ||||||||||||||
Contingent consideration liabilities |
— | — | ||||||||||||||
Total liabilities measured at fair value |
$ | $ | — | $ | $ | |||||||||||
June 30, 2021 |
December 31, 2020 |
|||||||
Fair value warrants per share |
$ | $ | ||||||
Share Price |
$ | $ | ||||||
Exercise price per share |
$ | $ | ||||||
Expected term (years) |
||||||||
Expected volatility |
% | % | ||||||
Risk-free interest rate |
% | % | ||||||
Dividend yield |
% | % |
June 30, |
||||||||
(in thousands) |
2021 |
2020 |
||||||
Beginning of the period |
$ | $ | ||||||
Fair value of acquisitions |
||||||||
Payments |
( |
) | ( |
) | ||||
Note issuance for settlements |
( |
) | ||||||
Measurement period adjustments |
( |
) |
||||||
Changes in fair value |
||||||||
Foreign exchange translation effects |
( |
) | ||||||
End of the period |
$ | $ | ||||||
(in thousands) |
Carrying Value |
Fair Value (Level 2) |
||||||
Balance at June 30, 2021 |
||||||||
New Term Loan Credit Facility |
$ | $ | ||||||
Notes |
||||||||
Notes payable and deferred obligations |
||||||||
Total long-term debt |
$ | $ | ||||||
(in thousands) |
Carrying Value |
Fair Value (Level 2) |
||||||
Balance at December 31, 2020 |
||||||||
New Term Loan Credit Facility |
$ | $ | ||||||
Notes |
||||||||
New Revolving Credit Facility |
||||||||
Notes payable and deferred obligations |
||||||||
Total long-term debt |
$ | $ | ||||||
Revenues |
Accounts Receivable |
|||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
as of |
||||||||||||||||||||||
(In thousands) |
June 30, 2021 |
June 30, 2020 |
June 30, 2021 |
June 30, 2020 |
June 30, 2021 |
December 31, 2020 |
||||||||||||||||||
Client 1 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Client 2 |
||||||||||||||||||||||||
Client 3 |
||||||||||||||||||||||||
Client 4 |
||||||||||||||||||||||||
Client 5 |
||||||||||||||||||||||||
Client 6 |
||||||||||||||||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
$ |
(in thousands) |
Sales |
Marketing |
Total |
|||||||||
Three Months Ended June 30, 2021 |
||||||||||||
Revenues |
$ | $ | $ | |||||||||
Depreciation and amortization |
$ | $ | $ | |||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | |||||||
Three Months Ended June 30, 2020 |
||||||||||||
Revenues |
$ | $ | $ | |||||||||
Depreciation and amortization |
$ | $ | $ | |||||||||
Operating income (loss) |
$ | $ | ( |
) | $ | |||||||
(in thousands) |
Sales |
Marketing |
Total |
|||||||||
Six Months Ended June 30, 2021 |
||||||||||||
Revenues |
$ | $ | $ | |||||||||
Depreciation and amortization |
$ | $ | $ | |||||||||
Operating income |
$ | $ | $ | |||||||||
Six Months Ended June 30, 2020 |
||||||||||||
Revenues |
$ | $ | $ | |||||||||
Depreciation and amortization |
$ | $ | $ | |||||||||
Operating income (loss) |
$ | $ | ( |
) | $ |
(in thousands) |
2021 |
|||
Beginning Balance |
$ | |||
Fair value at acquisition |
||||
Net loss attributable to redeemable noncontrolling interests |
( |
) | ||
Foreign currency translation adjustment |
||||
|
|
|||
Ending Balance |
$ | |||
|
|
Performance Period |
Number of Shares Threshold |
Number of Shares Target |
Number of Shares Maximum |
Weighted Average Fair Value per Share |
Maximum Potential Expense to be Recognized * |
Maximum Remaining Expense to be Recognized * |
||||||||||||||||||
January 1, 2021—December 31, |
$ |
$ |
$ |
* |
dollars in thousands |
Number of RSUs |
Weighted Average Grant Date Fair Value |
|||||||
Outstanding at January 1, 2021 |
$ | |||||||
Granted |
$ | |||||||
Vested |
$ | |||||||
Forfeited |
$ | |||||||
|
|
|
|
|||||
Outstanding at June 30, 2021 |
$ | |||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands, except share and earnings per share data) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Basic earnings per share computation: |
||||||||||||||||
Numerator: |
||||||||||||||||
Net income (loss) attributable to stockholders of Advantage Solutions Inc. |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
Denominator: |
||||||||||||||||
Weighted average common shares—basic |
||||||||||||||||
Basic earnings (loss) per common share |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
Diluted earnings per share computation: |
||||||||||||||||
Numerator: |
||||||||||||||||
Net income (loss) attributable to stockholders of Advantage Solutions Inc. |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
Change in fair value of warrant liability |
( |
) |
( |
) |
||||||||||||
Numerator for diluted earnings per share |
( |
) |
( |
) |
( |
) | ||||||||||
Denominator: |
||||||||||||||||
Weighted average common shares outstanding |
||||||||||||||||
RSUs and PSUs |
||||||||||||||||
Public and private placement warrants |
||||||||||||||||
Employee stock purchase plan and stock options |
||||||||||||||||
Weighted average common shares—diluted |
||||||||||||||||
Diluted earnings (loss) per common share |
$ |
$ |
( |
) |
$ |
$ |
( |
) | ||||||||
• | our sales segment revenues, operating income, and Adjusted EBITDA increased 13.2%, 126.7%, and 3.0%, respectively, and; |
• | our market segment revenues and operating income decreased 1.4% and 105.6%, respectively, and Adjusted EBITDA increased 20.0%. |
• | revenues increasing by $208.4 million, or 32.5%, to $849.9 million; |
• | operating income increasing from zero to $42.4 million; |
• | net income increasing by $43.6 million, or 115.2%, to $5.8 million; |
• | Adjusted Net Income increasing by $2.6 million, or 6.7%, to $41.4 million; and |
• | Adjusted EBITDA increasing by $9.9 million, or 8.9%, to $121.9 million. |
• | revenues increasing by $120.0 million, or 7.9%, to $1,640.9 million; |
• | operating income increasing by $48.6 million, or 154.6%, to $42.4 million; |
• | net income increasing by $63.2 million, or 106.2%, to $5.2 million; |
• | Adjusted Net Income increasing by $22.0 million, or 33.5%, to $87.7 million; and |
• | Adjusted EBITDA increasing by $15.0 million, or 6.9%, to $233.4 million. |
• | Organic Growth. |
• | Acquisitions. tuck-in acquisitions that can be completed at attractive purchase prices. |
• | Contingent Consideration. |
• | Depreciation and Amortization. |
accounting adjustments reflect a material economic cost to our business. Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangibles, such as client relationships and trade names, that comprise the majority of the finite-lived intangibles that create our amortization expense. |
• | Foreign Exchange Fluctuations. —Quantitative and Qualitative Disclosure of Market Risk—Foreign Currency Risk. |
• | Seasonality. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||||||
(amounts in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||||||||||||||||||
Revenues |
$ | 849,954 | 100.0 | % | $ | 641,543 | 100.0 | % | $ | 1,640,975 | 100.0 | % | $ | 1,520,939 | 100.0 | % | ||||||||||||||||
Cost of revenues |
698,226 | 82.1 | % | 509,923 | 79.5 | % | 1,351,565 | 82.4 | % | 1,256,616 | 82.6 | % | ||||||||||||||||||||
Selling, general, and administrative expenses |
46,607 | 5.5 | % | 80,569 | 12.6 | % | 87,088 | 5.3 | % | 121,625 | 8.0 | % | ||||||||||||||||||||
Recovery from Take 5 |
— | 0.0 | % | (7,700 | ) | (1.2 | )% | — | 0.0 | % | (7,700 | ) | (0.5 | )% | ||||||||||||||||||
Depreciation and amortization |
62,674 | 7.4 | % | 58,748 | 9.2 | % | 122,287 | 7.5 | % | 118,957 | 7.8 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total expenses |
807,507 | 95.0 | % | 641,540 | 100.0 | % | 1,560,940 | 95.1 | % | 1,489,498 | 97.9 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Operating income |
42,447 | 5.0 | % | 3 | 0.0 | % | 80,035 | 4.9 | % | 31,441 | 2.1 | % | ||||||||||||||||||||
Other (income) expenses: |
||||||||||||||||||||||||||||||||
Change in fair value of warrant liability |
(7,059 | ) | (0.8 | )% | — | 0.0 | % | (1,533 | ) | (0.1 | )% | — | 0.0 | % | ||||||||||||||||||
Interest expense, net |
37,189 | 4.4 | % | 51,521 | 8.0 | % | 68,054 | 4.1 | % | 103,315 | 6.8 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total other (income) expenses |
30,130 | 3.5 | % | 51,521 | 8.0 | % | 66,521 | 4.1 | % | 103,315 | 6.8 | % | ||||||||||||||||||||
Income (loss) before income taxes |
12,317 | 1.4 | % | (51,518 | ) | (8.0 | )% | 13,514 | 0.8 | % | (71,874 | ) | (4.7 | )% | ||||||||||||||||||
Provision for (benefit from) income taxes |
6,563 | 0.8 | % | (13,704 | ) | (2.1 | )% | 8,306 | 0.5 | % | (12,337 | ) | (0.8 | )% | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net income (loss) |
$ | 5,754 | 0.7 | % | $ | (37,814 | ) | (5.9 | )% | $ | 5,208 | 0.3 | % | $ | (59,537 | ) | (3.9 | )% | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Other Financial Data |
||||||||||||||||||||||||||||||||
Adjusted Net Income (1) |
$ | 41,397 | 4.9 | % | $ | 38,802 | 6.0 | % | $ | 87,661 | 5.3 | % | $ | 65,651 | 4.3 | % | ||||||||||||||||
Adjusted EBITDA (1) |
$ | 121,971 | 14.4 | % | $ | 112,044 | 17.5 | % | $ | 233,399 | 14.2 | % | $ | 218,395 | 14.4 | % |
(1) | Adjusted Net Income and Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA and reconciliations of net income (loss) to Adjusted Net Income and Adjusted EBITDA, see “ —Non-GAAP Financial Measures |
Three Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 561,644 | $ | 460,239 | $ | 101,405 | 22.0 | % | ||||||||
Marketing |
288,310 | 181,304 | 107,006 | 59.0 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
$ | 849,954 | $ | 641,543 | $ | 208,411 | 32.5 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 44,673 | $ | 11,021 | $ | 33,652 | 305.3 | % | ||||||||
Marketing |
(2,226 | ) | (11,018 | ) | 8,792 | (79.8 | )% | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating income |
$ | 42,447 | $ | 3 | $ | 42,444 | * | |||||||||
|
|
|
|
|
|
|
|
* | Not meaningful |
Three Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 89,523 | $ | 90,020 | $ | (497 | ) | (0.6 | )% | |||||||
Marketing |
32,448 | 22,024 | 10,424 | 47.3 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Adjusted EBITDA |
$ | 121,971 | $ | 112,044 | $ | 9,927 | 8.9 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 1,095,968 | $ | 968,037 | $ | 127,931 | 13.2 | % | ||||||||
Marketing |
545,007 | 552,902 | (7,895 | ) | (1.4 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
$ | 1,640,975 | $ | 1,520,939 | $ | 120,036 | 7.9 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 79,822 | $ | 35,215 | $ | 44,607 | 126.7 | % | ||||||||
Marketing |
213 | (3,774 | ) | 3,987 | (105.6 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating income |
$ | 80,035 | $ | 31,441 | $ | 48,594 | 154.6 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
(amounts in thousands) |
2021 |
2020 |
$ |
% |
||||||||||||
Sales |
$ | 173,600 | $ | 168,583 | $ | 5,017 | 3.0 | % | ||||||||
Marketing |
59,799 | 49,812 | 9,987 | 20.0 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Adjusted EBITDA |
$ | 233,399 | $ | 218,395 | $ | 15,004 | 6.9 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net income (loss) |
$ | 5,754 | $ | (37,814 | ) | $ | 5,208 | $ | (59,537 | ) | ||||||
Less: Net loss attributable to noncontrolling interest |
(367 | ) | (410 | ) | (797 | ) | (425 | ) | ||||||||
Add: |
||||||||||||||||
Equity based compensation of Topco and Advantage Sponsors’ management fee (a) |
(1,642 | ) | 4,184 | (4,456 | ) | 8,021 | ||||||||||
Change in fair value of warrant liability |
(7,059 | ) | — | (1,533 | ) | — | ||||||||||
Fair value adjustments related to contingent consideration related to acquisitions (c) |
3,598 | 4,128 | 2,555 | 8,223 | ||||||||||||
Acquisition-related expenses (d) |
2,797 | 4,861 | 7,943 | 10,390 | ||||||||||||
Restructuring expenses (e) |
6,934 | 46,565 | 11,030 | 47,663 | ||||||||||||
Litigation expenses (f) |
— | 2,500 | (818 | ) | 2,604 | |||||||||||
Amortization of intangible assets (g) |
49,172 | 47,652 | 98,610 | 95,498 | ||||||||||||
Costs associated with COVID-19, net of benefits received(h) |
(3,328 | ) | (1,019 | ) | (2,035 | ) | (19 | ) | ||||||||
Recovery from Take 5 |
— | (7,700 | ) | — | (7,700 | ) | ||||||||||
Costs associated with the Take 5 Matter (i) |
1,310 | 661 | 2,211 | 1,600 | ||||||||||||
Tax adjustments related to non-GAAP adjustments(j) |
(16,506 | ) | (25,626 | ) | (31,851 | ) | (41,517 | ) | ||||||||
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Adjusted Net Income |
$ | 41,397 | $ | 38,802 | $ | 87,661 | $ | 65,651 | ||||||||
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|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net income (loss) |
$ | 5,754 | $ | (37,814 | ) | $ | 5,208 | $ | (59,537 | ) | ||||||
Add: |
||||||||||||||||
Interest expense, net |
37,189 | 51,521 | 68,054 | 103,315 | ||||||||||||
Provision for income taxes |
6,563 | (13,704 | ) | 8,306 | (12,337 | ) | ||||||||||
Depreciation and amortization |
62,674 | 58,748 | 122,287 | 118,957 | ||||||||||||
Equity based compensation of Topco and Advantage Sponsors’ management fee (a) |
(1,642 | ) | 4,184 | (4,456 | ) | 8,021 | ||||||||||
Change in fair value of warrant liability |
(7,059 | ) | — | (1,533 | ) | — | ||||||||||
Stock based compensation expense (b) |
8,988 | — | 17,643 | — | ||||||||||||
Fair value adjustments related to contingent consideration related to acquisitions (c) |
3,598 | 4,128 | 2,555 | 8,223 | ||||||||||||
Acquisition-related expenses (d) |
2,797 | 4,861 | 7,943 | 10,390 | ||||||||||||
EBITDA for economic interests in investments (k) |
(1,807 | ) | (887 | ) | (2,996 | ) | (2,785 | ) | ||||||||
Restructuring expenses (e) |
6,934 | 46,565 | 11,030 | 47,663 | ||||||||||||
Litigation expenses (f) |
— | 2,500 | (818 | ) | 2,604 | |||||||||||
Costs associated with COVID-19, net of benefits received(h) |
(3,328 | ) | (1,019 | ) | (2,035 | ) | (19 | ) | ||||||||
Recovery from Take 5 |
— | (7,700 | ) | — | (7,700 | ) | ||||||||||
Costs associated with the Take 5 Matter (i) |
1,310 | 661 | 2,211 | 1,600 | ||||||||||||
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Adjusted EBITDA |
$ | 121,971 | $ | 112,044 | $ | 233,399 | $ | 218,395 | ||||||||
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|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
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(in thousands) |
||||||||||||||||
Operating income |
$ | 44,673 | $ | 11,021 | $ | 79,822 | $ | 35,215 | ||||||||
Add: |
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Depreciation and amortization |
44,710 | 42,234 | 87,274 | 85,341 | ||||||||||||
Equity based compensation of Topco and Advantage Sponsors’ management fee (a) |
(678 | ) | 3,538 | (2,516 | ) | 6,737 | ||||||||||
Stock based compensation expense (b) |
4,730 | — | 9,424 | — | ||||||||||||
Fair value adjustments related to contingent consideration related to acquisitions (c) |
(5,027 | ) | 4,128 | (4,249 | ) | 8,440 | ||||||||||
Acquisition-related expenses (d) |
2,280 | 4,081 | 5,600 | 8,237 | ||||||||||||
EBITDA for economic interests in investments (k) |
(2,110 | ) | (1,338 | ) | (3,597 | ) | (3,409 | ) | ||||||||
Restructuring expenses (e) |
1,176 | 23,326 | 1,956 | 24,078 | ||||||||||||
Litigation expenses (f) |
— | 2,500 | (516 | ) | 2,604 | |||||||||||
Costs associated with COVID-19, net of benefits received(h) |
(231 | ) | 530 | 402 | 1,340 | |||||||||||
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Sales Segment Adjusted EBITDA |
$ | 89,523 | $ | 90,020 | $ | 173,600 | $ | 168,583 | ||||||||
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|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Operating (loss) income |
$ | (2,226 | ) | $ | (11,018 | ) | $ | 213 | $ | (3,774 | ) | |||||
Add: |
||||||||||||||||
Depreciation and amortization |
17,964 | 16,514 | 35,013 | 33,616 | ||||||||||||
Equity based compensation of Topco and Advantage Sponsors’ management fee (a) |
(964 | ) | 646 | (1,940 | ) | 1,284 | ||||||||||
Stock based compensation expense (b) |
4,258 | — | 8,219 | — | ||||||||||||
Fair value adjustments related to contingent consideration related to acquisitions (c) |
8,625 | — | 6,804 | (217 | ) | |||||||||||
Acquisition-related expenses (d) |
517 | 780 | 2,343 | 2,153 | ||||||||||||
EBITDA for economic interests in investments (k) |
303 | 451 | 601 | 624 | ||||||||||||
Restructuring expenses (e) |
5,758 | 23,239 | 9,074 | 23,585 | ||||||||||||
Litigation expenses (f) |
— | — | (302 | ) | — | |||||||||||
Costs associated with COVID-19, net of benefits received(h) |
(3,097 | ) | (1,549 | ) | (2,437 | ) | (1,359 | ) | ||||||||
Recovery from Take 5 |
— | (7,700 | ) | — | (7,700 | ) | ||||||||||
Costs associated with the Take 5 Matter (i) |
1,310 | 661 | 2,211 | 1,600 | ||||||||||||
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Marketing Segment Adjusted EBITDA |
$ | 32,448 | $ | 22,024 | $ | 59,799 | $ | 49,812 | ||||||||
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(a) | Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (or certain of the management companies associated with it or its advisors) pursuant to a management services agreement in the three and six months ended June 30, 2021 and 2020. Also represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors, (ii) equity-based compensation expense associated with the Common Series C Units of Topco as a result of the Transactions, (iii) compensation amounts associated with the Company’s Management Incentive Plan originally scheduled for potential payment March 2022 that were accelerated and terminated as part of the Transactions, and (iv) compensation amounts associated with the anniversary payments to Tanya Domier. Certain of Ms. Domier’s anniversary payments were accelerated as part of the Transactions. |
(c) | Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the applicable periods. See Note 6—Fair Value of Financial Instruments to our unaudited condensed financial statements for the three and six months ended June 30, 2021 and 2020. |
(d) | Represents fees and costs associated with activities related to our acquisitions and restructuring activities related to our equity ownership, including transaction bonuses paid in connection with the Transactions, professional fees, due diligence, public company readiness and integration activities. |
(e) | Represents fees and costs associated with various internal reorganization activities among our consolidated entities. |
(f) | Represents legal settlements that are unusual or infrequent costs associated with our operating activities. |
(g) | Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions. |
(h) | Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief. |
(i) | Represents $1.3 million, $2.2 million, $0.7 million, and $1.6 million of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the three and six months ended June 30, 2021 and 2020, respectively. |
(j) | Represents the tax provision or benefit associated with the adjustments above, taking into account the Company’s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact. |
(k) | Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements. |
Six Months Ended June 30, |
||||||||
(in thousands) |
2021 |
2020 |
||||||
Net cash provided by operating activities |
$ | 55,924 | $ | 234,427 | ||||
Net cash used in investing activities |
(33,384 | ) | (66,814 | ) | ||||
Net cash (used in) provided by financing activities |
(64,489 | ) | 100,883 | |||||
Net effect of foreign currency fluctuations on cash |
(855 | ) | (5,860 | ) | ||||
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|||||
Net change in cash, cash equivalents and restricted cash |
$ | (42,804 | ) | $ | 262,636 | |||
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• | We determined that we did not design and maintain effective controls related to our due diligence procedures for potential acquisitions with respect to databases and information technology systems used to recognize revenue and determine the satisfaction of performance obligations. Specifically, internal controls were not designed and maintained to assess the risks associated with potential acquisitions and the need to perform due diligence as part of purchase accounting with respect to databases and information technology systems utilized to determine the satisfaction of performance obligations, and to communicate and evaluate the results of due diligence. |
• | We determined that we did not design and maintain effective controls to establish an appropriate basis for reliance on data and information in our information technology systems used for revenue recognition in certain of our newly acquired businesses. Specifically, internal controls were not designed and maintained to ensure the completeness and accuracy of system generated reports used to verify the satisfaction of performance obligations. |
• | We determined that we did not design and maintain effective controls related to information and communication specifically with respect to our whistleblower complaint process to properly investigate, communicate and resolve whistleblower complaints and allegations related to accounting or other misconduct in a timely manner, and with respect to communication with appropriate parties. Specifically, internal controls were not designed and maintained to ensure that individuals conducting investigations into allegations of accounting or other misconduct had the appropriate expertise and supervision, and that the results of the investigations have been communicated to the appropriate parties or that other transactions are communicated to the appropriate parties. |
• | In order to validate more fully an acquisition target with databases and information technology systems used to recognize revenue and determine the satisfaction of performance obligations, we are designing and implementing policies and procedures to perform more robust risk assessment and due diligence procedures in connection with such potential acquisitions, including engaging third-party experts to evaluate such target companies’ databases or information technology, and enhancing the communication and evaluation of due diligence results, as appropriate. During the quarter ended June 30, 2021, we implemented revised policies and procedures related to the risk assessment and due diligence procedures in connection with potential acquisitions. We expect to test the implementation of the revised policies and procedures as part of our internal control over financial reporting in connection with acquisitions occurring subsequent to June 30, 2021. |
• | We are enhancing our procedures related to the risk assessment, and evaluation of the completeness and accuracy of our internal reporting processes with respect to newly acquired businesses, including with respect to the completeness and accuracy of reports used to verify the satisfaction of performance obligations under client contracts and the accuracy of recognized revenues. During the quarter ended June 30, 2021, we have finalized the design of revised risk assessment procedures over newly acquired businesses, including establishing certain additional procedures to be performed over reports used in the recognition of revenue. We are in the process of implementing the related internal controls and expect to test the implementation of the revised risk assessment procedures in connection with acquisitions occurring subsequent to June 30, 2021. |
• | We are designing, enhancing and implementing procedures and policies to promote timely and proper risk assessment, investigation, resolution, communication and disclosure of any whistleblower complaints or reported allegations of accounting or other misconduct. During the quarter ended June 30, 2021, we implemented the associated changes in the design of our internal controls and expect to test the implementation of the related changes to these controls during the quarter ended September 30, 2021. |
• | During the quarter ended June 30, 2021, we designed and implemented procedures for the evaluation of settlement features used to determine the classification of certain warrant instruments. We expect to test the implementation of these control procedures during the quarter ended September 30, 2021. |
Exhibit Number |
Description | |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
32.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 | |
32.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
ADVANTAGE SOLUTIONS INC. | ||
By: | /s/ Tanya Domier | |
Tanya Domier | ||
Chief Executive Officer and Director | ||
Date: | August 9, 2021 | |
By: | /s/ Brian Stevens | |
Brian Stevens | ||
Chief Financial Officer and Chief Operating Officer (Principal Financial Officer) | ||
Date: | August 9, 2021 |