Q1 2024 Advantage Solutions Inc Earnings Call
Operator: Greetings and welcome to the Advantage Solutions first quarter 2024 earnings call. At this time, all participants are in a listen only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. A confirmation tone will indicate your line is in question.
Greetings and welcome to the advantage solutions first quarter 'twenty 'twenty four earnings call.
At this time all participants are in a listen only mode. After the Speakers' remarks, there'll be a question and answer session task. A question. During the session you will need to press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. If anyone should require operator assistance during the conference.
Operator: If anyone should require operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Ruben Mejia, Vice President of Investment Relations. Thank you, Ruben. You may begin.
Please press Star zero.
As a reminder, this conference is being recorded it is now my pleasure to introduce you to your host Ruben Mella Vice.
Ruben Mella: Vice President of Investor Relations. Thank you Reuben you may begin.
Ruben Mejia: Thank you, Operator, and thank you, everyone, for joining us on the Advantage Solutions First Quarter Earnings Conference Call. On the call with me today are Dave Peacock, Chief Executive Officer; Chris Growe, Chief Financial Officer; and Sean Choksi, Senior Vice President of Strategy and M&A. Dave and Chris will provide their prepared remarks, after which we will open the call to questions and answers.
Ruben Mella: Thank you operator, and thank you everyone for joining us on advanced solutions first quarter earnings Conference call.
Ruben Mella: On the call to me today are Dave <unk>, Chief Executive Officer, Chris Growe, <unk>, Chief Financial Officer, and Sean chose ski senior Vice President of strategy and M&A.
Ruben Mella: Dave and Chris will provide their prepared remarks, after which we will open the call for question and answer session.
Ruben Mejia: During this call, management may make forward-looking statements within the meaning of the federal securities laws. Such statements are based on management's current expectations and involve assumptions, risk, and uncertainty that are difficult to predict. It is important to note that the 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 expressly qualified in their entirety by such factors. The company does not undertake any duty to update or revise any forward-looking statement except as required by law.
Ruben Mella: 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 assumptions risks and uncertainties that are difficult to predict.
Ruben Mella: It is important to note that the 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.
Ruben Mella: All forward looking statements are expressly qualified in their entirety by such factors.
Ruben Mella: The company does not undertake any duty to update or revise any forward looking statement, except as required by law.
Ruben Mejia: We want to draw your attention to the fact that management remarks today will focus on certain non-GAAP financial measures. Our earnings release issued earlier today provides detailed reconciliations of these non-GAAP financial measures to the most comparable GAAP measure. This call is being webcast, and a recording will also be available on the company's investor relations website. We will refer to our presentation during the prepared remarks, which is also accessible in the events and presentation section of the IR website. And now, I would like to turn the call over to Advantage's CEO, David Peacock.
Ruben Mella: We want to draw your attention to the fact that management remarks today will focus on certain non-GAAP financial measures. Our earnings release issued earlier today provided detailed reconciliations of these non-GAAP financial measures the most comparable GAAP measure.
Ruben Mella: This call is being webcast and a recording will also be available on the company's Investor Relations website.
Ruben Mella: We will refer to a presentation during their prepared remarks, which is also accessible on the events and presentations section of the IR website.
Ruben Mella: And now I would like to turn the call over to advantage of CEO, Dave Peacock.
David A. Peacock: Thanks, Reuben. Good morning, everyone, and thank you for joining us. As you saw in our results issued this morning, we unveiled our new reporting segment, Branded Services, Experiential Services, and Retailer Services, which we believe provide a clearer picture of our business and the drivers of our financial performance. We reported revenues excluding pass-through costs of $771 million and adjusted EBITDA of $79 million for the quarter, both inclusive of discontinued
David A. Peacock: Thanks, Robin and good morning, everyone and thank you for joining us as you saw in our results issued this morning, we unveiled our new reporting segment branded.
David A. Peacock: Branded services experiential services and retailer services, which we believe provide a clearer picture of our business and the drivers of our financial performance.
David A. Peacock: We reported revenues, excluding pass through costs of $771 million and adjusted EBITDA of $79 million for the quarter.
David A. Peacock: Both inclusive of discontinued operations.
David A. Peacock: We also paid down $51 million in debt and bought back approximately 3 million shares in the first quarter and nearly 2 million shares in April, which is consistent with our objective of offsetting dilution and taking advantage of what we believe is an undervalued stock price. Our financial results for the quarter were in line with our internal budget, and we remain on track to achieve our four-year guidance. Experiential services outperformed our expectations in the quarter. Retailer services also performed well despite holiday timing and a tough comparison. For branded services, our decline in client orders due to market softness and higher than anticipated costs drove the year-over-year decline in adjusted EBITDA.
David A. Peacock: We also paid down $51 million in debt and bought back approximately 3 million shares in the first quarter and nearly 2 million shares in April which is consistent with our objective of offsetting dilution and taking advantage of what we believe is an undervalued stock price.
David A. Peacock: Our financial results for the quarter were in line with our internal budget and we remain on track to achieve our full year guidance.
David A. Peacock: Experiential services outperformed our expectations in the quarter retailers for services also performed well despite holiday timing and a tough comparison for branded services our decline in client orders due to market softness and higher than anticipated costs drove the year over year decline in adjusted EBITDA.
David A. Peacock: Overall, the Advantage team did a great job implementing our strategic initiatives, transitioning the resignation of two client relationships, and executing the expansion of services for our large existing client for demonstration services in a challenging market environment. Inflation and the rising cost of living continue to pressure a growing segment of our consumers. We believe those macro factors contributed to the market softness in the first quarter as measured in total U.S. food channels.
David A. Peacock: Overall, the advantaged team did a great job implementing our strategic initiatives transitioning the resignation of two client relationships and executing the expansion of services for our large existing client for a demonstration services in a challenging market environment.
David A. Peacock: Inflation and the rising cost of living continued to pressure a growing segment of our consumers. We believe those macro factors contributed to the market softness in the first quarter as measured in total U S food channels.
David A. Peacock: Our upcoming Advantage Outlook survey of nearly 100 retailers and CPG manufacturers provides valuable insights into what they expect in the coming months. For example, approximately 40% of retailers surveyed expect to increase online fulfillment labor over the next six months. Retailers tell us they're continuing to lean into private brands as unit volume continues to grow, and their top strategies over the next six months are increasing product base and displays and adding new items. They also remain focused on promotions to gain share. That was followed by an emphasis on impulse items in digital programs.
David A. Peacock: Our upcoming advantage outlook survey of nearly 100 retailers and CPG manufacturers provided valuable insights into what they expect in the coming months.
David A. Peacock: Approximately 40% of retailers surveyed expect to increase online fulfillment labor over the next six months.
David A. Peacock: Retailers tell us, they're continuing to lean into private brands as unit volume continues to grow and their top strategies over the next six months are increasing product facings and displays and adding new items.
David A. Peacock: Retailers also remains focused on promotions to gain share.
David A. Peacock: That is followed by an emphasis on impulse items in digital programs.
David A. Peacock: Our retail services team includes Damon, a leading private brand broker for scores of retailers, and our SAS division, which helps retailers with shelf resets, remodels, and other in-store services and is a perfect partner to address this growing demand for on-shelf support. Our branded services team and their retail merchandising arm, which visits stores for CPG firms to ensure on-shelf availability and display execution, will also be engaged as retailers seek to increase efforts in these areas. Over half of the manufacturers in our survey say they plan to increase trade dollars, discount depth, and frequency of promotion to drive volume, with displays highlighting lower prices and generating new sales at regular prices.
David A. Peacock: Our retail services team includes Damon a leading private brand broker for scores of retailers in our SaaS division, which helps retailers with shelf resets remodels and other in store services and as a perfect partner to address this growing demand for on shelf support.
David A. Peacock: Branded services team and their retail merchandising arm that visit stores for CPG firms to ensure on shelf availability and display execution well also be engaged as retailers seek to increase efforts in these areas.
David A. Peacock: Over half of the manufacturers in our survey say they plan to increase trade dollars discounting depth and frequency of promotion to drive volume with displays highlighting lower prices and generating new sales at regular price at.
David A. Peacock: These trends align perfectly with our capabilities and branded services as we engage hundreds of retailers on behalf of thousands of clients in selling new programs at retail height. Our Experiential Services Group will also continue to benefit from the growth, both realized and expected, in Mass, Club, and Grocery channels. We believe our competitive advantage is a differentiated understanding of the entire consumer ecosystem, stemming from our unique position at the intersection of brands and retailers, brick and mortar and e-commerce, private label, and CPG.
David A. Peacock: These trends align perfectly with our capabilities and branded services as we engage hundreds of retailers on behalf of thousands of clients and selling in new programs at retail headquarters.
David A. Peacock: Our experiential services group will also continue to benefit from the growth, both realized and expected and mass club and grocery channels.
David A. Peacock: We believe our competitive advantage is a differentiated understanding of the entire consumer ecosystem stemming from our unique position at the intersection of brands and retailers brick and mortar and e-commerce and private label and CPG.
David A. Peacock: This gives us a deep understanding of our clients' and customers' challenges and opportunities while positioning us as a conduit to both groups' efforts to drive performance. That means we can provide a high return on investment for CPGs and retailers because we have a unique perspective across the entire consumer industry and the technology, insights, and culture to adapt quickly to market changes. Our business is highly relational. Our teammates are committed to serving with heart and executing relentlessly.
David A. Peacock: This gives us a deep understanding of our clients and customers challenges and opportunities while positioning us as a conduit to both groups efforts to drive performance that means we can provide a high return on investment for Cpg's and retailers because we have a unique perspective across the entire consumer industry and the technology inside.
David A. Peacock: And culture to adapt quickly to market changes.
David A. Peacock: Our business is highly relational and our teammates are committed to serving with heart and executing relentlessly building trust and working to earn it daily as critical to our success and reflected in our reputation as one of newsweek's world's most trustworthy companies of 2024.
David A. Peacock: Building trust and working to earn it daily is critical to our success and reflected in our reputation as one of Newsweek's world's most trustworthy companies in 2024. This is a great tribute to our 70,000 plus teammates who strive every day to earn this distinction.
David A. Peacock: This is a great tribute to our 70000, plus teammates who endeavor every day to earn this distinction.
David A. Peacock: The trust we earn has led us to enduring relationships with clients that have lasted for decades. Among our top 100 clients, the average relationship duration is more than 15 years, with approximately 95% retention over time. For example, a leading global personal care product company returned to us after spending time with a lower-cost competitor. They needed a trustworthy provider to deliver the required services with the proper scope, flexibility, and productivity. And our team is able to do that and deliver in this way with a high return on investment.
David A. Peacock: The trust we earn has led us to are enduring relationships with clients that have lasted for decades.
David A. Peacock: Among our top 100 clients. The average relationship duration is more than 15 years with approximately 95% retention over time.
David A. Peacock: For example, a leading global personal care product company returned to us after spending time with a lower cost competitor they.
David A. Peacock: They needed a trustworthy providers to deliver that required services with the proper scope flexibility and productivity and our team is able to do that and deliver in this way with a high return on investment.
David A. Peacock: Branded Services will provide retail merchandising across multiple categories and surge work to double down during critical, seasonal, and promotional periods for this client. We're excited to have them back, and we will prove they made the right decision.
David A. Peacock: Branded services will provide retail merchandising across multiple categories and surge work to double down during critical seasonal and promotional periods for this client.
David A. Peacock: We're excited to have them back and we will prove they made the right decision.
David A. Peacock: We signed a multi-million dollar agreement with a well-known leader in the juice industry. After delivering a solid return on investment during a test, Advantage's retail merchandising arm of the branded services team will drive all retail execution and merchandising for this company. We are expanding our relationship with a longstanding branded services client in center store frozen packaged goods. Our agreement includes headquarters sales, category management, and administration across grocery, as well as leading all digital commerce execution. Our collaboration is poised to elevate this brand further as the client leans into new innovations to meet evolving consumer demands. We successfully renewed two longstanding major big box retailers for our experiential service.
David A. Peacock: We signed a multimillion dollar agreement with a well known leader in the juice industry. After delivering a solid return on investment during a test advantages retail merchandising arm of the stranded services team will drive all retail execution and merchandising for this company.
David A. Peacock: We are expanding our relationship with a longstanding branded services client in center store frozen packaged goods.
David A. Peacock: Our agreement includes headquarter sales category management and administration across grocery and leading all digital commerce execution.
David A. Peacock: Our collaboration is poised to elevate this brand further as the client leans into new innovations to meet evolving consumer demands.
David A. Peacock: We successfully renewed two long standing major big box retailers for our experiential services.
David A. Peacock: One of the deals expands on services we have provided for over a decade in e-commerce, executing digital sampling inside monthly beauty subscription boxes for more than 150,000 subscribers. The other big box retailer relies on us for innovative approaches to execute a beauty products concierge strategy with content, a learning library, and a virtual advice program. Finally, Advantage's experiential services continue to innovate and differentiating its service offerings in impactful ways to share and deliver member experiences, proving why it has been the number one experiential business in the United States for the last 10 years.
David A. Peacock: One of the deals expands on services, we have provided for over a decade and ecommerce executing digital sampling inside monthly beauty subscription boxes for more than 150000 subscribers.
David A. Peacock: The other big box retailer relies on us for innovative approaches to execute our beauty products concierge strategy with content learning library in a virtual advice program.
David A. Peacock: Finally advantages experiential services continues innovating and differentiating its service offerings and impactful ways to share and deliver member experiences proving why it has been the number one experiential business in the United States for the last 10 years.
David A. Peacock: We are the primary partner for a channel-leading client where we lead all sampling experiences in locations across the U.S. and 12 countries. Our global footprint often gives us a leg up and opens the doors to new opportunities. Building off the success of our unique experiential offerings in Japan, we have launched teppanyaki carts in more than 100 locations in Canada.
David A. Peacock: We are the primary partner for a channel leading client, where we lead all sampling experiences in locations across the U S. In 12 countries.
David A. Peacock: Our global footprint, often gives us a leg up and opens the doors to new opportunities building off the success of our unique experiential offerings in Japan, we have launched Hep and Yoki cards and more than 100 locations in Canada. These cards allow us to offer an exciting approach to sampling food items in a new way to engage with shoppers at also.
David A. Peacock: These carts allow us to offer an exciting approach to sampling food items and a new way to engage with shopping. It also opens sampling opportunities for more products, such as meat, fresh produce, and frozen food. The first week of the Canadian launch generated an average sales lift of over 150% for the products we sampled, and we are excited about what the future holds as we explore expanding into the U.S. As we look to the road ahead, we are energized by Advantage's untapped potential as we invest in talent, tools, and technology.
David A. Peacock: So open sampling opportunities for more products, such as meat fresh produce and frozen food. The first week of the Canadian launch generated an average sales lift of over 150% with the products, we sampled and we're excited about what the future holds as we explore expanding into the U S.
David A. Peacock: As we look to the road ahead, we are energized by advantages untapped potential as we invest in talent tools and technology and.
David A. Peacock: In the area of technology, we are focusing on commercial capabilities while also exploring partnerships where we can leverage leaders in other industries to enhance our ability to serve clients more effectively. A centerpiece of our modernized technology capabilities is our relationship with GenPAC. We are already using generative AI to deliver new and innovative solutions with greater speed and accuracy within the order-to-cash and back-office administration functions, unlocking value and creating a competitive advantage for 500 clients and countries. There is much more to come as our relationship evolves and grows.
David A. Peacock: In the area of technology, we are focusing on commercial capabilities. While also exploring partnerships, where we can leverage leaders in other industries to enhance our ability to serve clients more effectively.
David A. Peacock: The centerpiece of our modernized technology capabilities as our relationship with Genpact.
David A. Peacock: We are already using generative AI to deliver new and innovative solutions with greater speed and accuracy within the order to cash and back office administration function unlocking value in creating a competitive advantage for 500 clients and counting.
David A. Peacock: Is much more to come as our relationship evolves and grows.
David A. Peacock: Similarly, we are investing in establishing our own AI core competency center, which aims to weave AI where it best benefits our business, from applications that serve customers, such as contract management and routing merchandisers, to those that serve internal needs like HR workflow and certain analysis of large data sets. Our evolution as a future-focused, insights-driven strategic provider requires us to be high-touch, high-tech, and high-value, and we will continue to invest in leading-edge capabilities and partners. Advantage recently entered into an agreement with a retail technology company specializing in image recognition to provide real-time inventory tracking at retail.
David A. Peacock: Separately, we are investing in establishing our own AI core competency center, which aims to weave AI, where it benefits our business from applications that serve customers such as contract management and routing merchandisers to those that serve internal needs like HR workflow and certain analysis of large datasets.
David A. Peacock: Our evolution as a future focused insights driven strategic provider requires us to be high touch high Tech and high value and we will continue to invest in leading edge capabilities and partnerships.
David A. Peacock: Advantaged recently entering into an agreement with its retail technology company specializing in image recognition to provide real time inventory tracking at retail.
David A. Peacock: We are co-developing solutions that enable us to make faster, smarter decisions about what is happening on the shelf. Together, we will enhance retail execution by combining our reach across the industry with their high-speed analytic capability. We're also enhancing data visualization tools to fuel our Omnicommerce efforts and capabilities. Competitors often rely on third-party data to inform decisions. Once complete, our modernized tech tools are expected to offer a significant point of difference.
David A. Peacock: We are co developing solutions that enable us to make faster smarter decisions about what is happening on the shelf.
David A. Peacock: Together, we will enhance retail execution by combining our reach across the industry with their high speed analytic capabilities.
David A. Peacock: We're also enhancing data visualization tools to fuel, our omni commerce efforts and capabilities.
David A. Peacock: Competitors, often rely on third party data to inform decisions.
David A. Peacock: Once complete our modernized tech tools are expected to offer a significant point of difference. For example, we expect to overlay 600 million points of proprietary data to share detailed analytical dashboards with real time insights on our performance by category region and store to our clients.
David A. Peacock: For example, we expect to overlay 600 million points of proprietary data to share detailed analytical dashboards with real-time insights on performance by category, region, and store with our clients. In the not too distant future, we will be able to visualize in seconds what took days or weeks in the past and pinpoint root causes immediately to solve potential problems and capitalize on higher return opportunities for our brand clients and our retail customer teams.
David A. Peacock: And they're not too distant future, we will be able to visualize in seconds, what took days or weeks in the past and pinpoint root causes immediately to sell potential problems and capitalize on higher return opportunities for our brand clients in our retail customer teams.
David A. Peacock: This year, we are focused on testing these capabilities and, based on the results, beginning the implementation phase with our team. We are complementing our scale, reach, and relationships with modern technology to better deliver our breadth of services so that brands and retailers can truly differentiate themselves in the marketplace. We will continue to evaluate opportunities to leverage technology for the benefit of our clients. With more leading-edge commercial capabilities and an integrated operating model, we are confident Advantage will continue to lead as a strategic provider of choice to deliver the speed and precision required to convert more shoppers into buyers.
David A. Peacock: For this year, we are focused on testing these capabilities and based on the results began the implementation phase with our teams.
David A. Peacock: We are complementing our scale reach and relationships with modern technology to better deliver our breadth of services, so that brands and retailers can truly differentiate themselves in the marketplace. We will continue to evaluate opportunities to leverage technology for the benefit of our clients.
David A. Peacock: With more leading edge commercial capabilities and an integrated operating model. We are confident advantage will continue to lead as a strategic provider of choice to deliver the speed and precision required to convert more shoppers into buyers.
David A. Peacock: That is why our strategy to simplify business matters, aligning Advantage's time, talent, and resources with its core capabilities, is crucial to the company's long-term success. A recent announcement of the sale of Adlucent represents another step towards that vision, as well as reducing debt to optimize our capital structure. With that, I will now pass the call over to Chris to review our financial performance.
David A. Peacock: That is why our strategy to simplify the business matters aligning advantages time talent and resources with its core capabilities is crucial to the company's long term success.
David A. Peacock: Our recent announcement of the sale of at Lucent represents another step towards that vision as well as reducing debt to optimize our capital structure.
David A. Peacock: With that I will now pass the call over to Chris to review our financial performance.
Christopher Robert Growe: Thank you, Dave, and welcome to all of you joining the call today. My comments regarding our financial performance will include discontinued operations. Foreign exchange had a minimal impact on our first quarter results because of the deconsolidation of the Advantage Small and European joint venture. In addition to our new reporting segments, we will also discuss our revenue performance, excluding pass-through costs, which provides a clearer picture of our top-line performance and is similar to our peers' information. Consolidated revenues were $771 million, excluding approximately $135 million in pass-through costs.
Christopher Robert Growe: Thank you, Dave and welcome to all of you joining the call today.
Christopher Robert Growe: My comments regarding our financial performance will include discontinued operations.
Christopher Robert Growe: Foreign exchange had a minimal impact on our first quarter results because of the deconsolidation of the vantage small in European joint venture.
Christopher Robert Growe: In addition to our new reporting segments. We will also discuss our revenue performance excluding pass through costs, which provides a clearer picture of our topline performance and it's similar to our peers information.
Christopher Robert Growe: Consolidated revenues were $771 million, excluding approximately $135 million and pass through costs.
Christopher Robert Growe: Revenues increased by 1% when excluding divestitures and the impact of foreign exchange. Adjusted EBITDA was $79 million, representing a 10.2% margin on revenues, less pass-through costs. We expected a decline in Justity Badda in the first quarter.
Christopher Robert Growe: Revenues increased by 1% when excluding divestitures and the impact of foreign exchange.
Christopher Robert Growe: Adjusted EBITDA was $79 million, representing a 10, 2% margin on revenues less pass through costs.
Christopher Robert Growe: We expected a decline in adjusted EBITDA in the first quarter. However, the margin drag was more than planned as robust growth from experiential services and a good performance from retailer services were offset by softer performance in branded services. We continue to focus on achieving pricing in relation to inflation across our business, which we did in the first quarter.
Christopher Robert Growe: However, the margin drag was more than planned as robust growth from experiential services and a good performance from retailer services were offset by softer performance in branded services. We continue to focus on achieving pricing in relation to inflation across our business, which we did in the first quarter, but we cannot fully cover the inflationary pressures, especially in January and February. Our financial performance improved in March, and early results in April were favorable.
Christopher Robert Growe: But we cannot fully cover the inflationary pressures, especially in January and February.
Christopher Robert Growe: Our financial performance improved in March and early results in April were favorable or.
Christopher Robert Growe: Our investments and initiatives are designed to enhance the delivery of our services to current clients and customers and attract new business. While that has increased costs year-over-year by approximately $10 million in the quarter, the new organizational structure will allow us to improve operational efficiencies and further optimize our cost structure under the new shared services model. This will be complemented by the expected benefits of collaboration with Genpact and Tata Consultancy Services.
Christopher Robert Growe: Our investments and initiatives are designed to enhance the delivery of our services to current clients and customers and attract new business. While that is increased costs year over year by approximately $10 million in the quarter. The new organizational structure will allow us to improve operational efficiencies and further optimize our cost structure under the new shared services model.
Christopher Robert Growe: This will be complemented by the expected benefits of collaboration with Genpact and Tata consultancy services.
Christopher Robert Growe: The leadership team takes its fiduciary duty seriously and manages our cost and capital appropriately, focusing on achieving efficiency for our business, clients, and customers. We will share more details as these efforts take hold. I want to take a few minutes to review our performance by segment, beginning with Branded Services. Revenues, excluding approximately $50 million in pass-through costs, as well as the impact of FX and divestitures, declined approximately 3% to $314 million.
Christopher Robert Growe: The leadership team takes this fiduciary duty seriously and managed our cost and capital appropriately focusing on achieving efficiency for our business clients and customers. We will share more details as these efforts take hold.
Christopher Robert Growe: I want to take a few minutes to review our performance by segment beginning with branded services.
Christopher Robert Growe: Revenues, excluding approximately $50 million and pass through costs as well as the impact of FX and divestitures declined approximately 3% to $314 million adjust.
Christopher Robert Growe: Adjusted EBITDA was $41 million. There were three factors that drove the performance. First, we worked to complete the transition of two client resignations in the quarter, which impacted revenues, but also costs to a greater degree. Ideally, we timed the reduction of the expenses associated with the conclusion of services. Timing it right is not easy, and we absorbed more costs than expected in the quarter. Second, the soft market conditions Dave mentioned, especially early in the quarter, were partially driven by shipment timing to retailers and a decline in client orders.
Christopher Robert Growe: Adjusted EBITDA was $41 million.
Christopher Robert Growe: There were three factors that drove the performance.
Christopher Robert Growe: First we work to complete the transition of two client resignations in the quarter, which impacted revenues, but also cost to a greater degree ideally we turned the reduction of expenses associated with the conclusion of services timing. It right is not easy and we absorbed more costs than expected in the quarter.
Christopher Robert Growe: Second the soft market conditions, Dave mentioned, especially early in the quarter were partially driven by shipment timing to retailers and a decline in client orders.
Christopher Robert Growe: Third, the investments to implement several of our strategic initiatives outside of the ERP upgrade were higher than planned. We do not expect to offset those investments later in the year. Moving to experiential services, revenues, excluding $85 million in pass-through costs, as well as the impact of FX, increased nearly 21% to $228 million. Adjusted EBITDA was $17 million, a 150% increase over the prior year. Our event count reached 88% of 2019 pre-pandemic levels.
Christopher Robert Growe: Third the investments to implement several of our strategic initiatives outside of the ERP upgrade were higher than planned we do not expect to offset those investments later in the year.
Christopher Robert Growe: Moving to experiential services revenues, excluding $85 million and pass through costs as well as the impact of FX increased nearly 21% to $228 million.
Christopher Robert Growe: Adjusted EBITDA was $17 million, a 150% increase over the prior year.
Christopher Robert Growe: Our event count reached 88% of 2019 pre pandemic levels.
Christopher Robert Growe: Daily event activity measured in thousands per day increased by approximately 13 percent. Our teams did a terrific job leveraging our current infrastructure to support the volume growth in the quarter, which drove the improvement in adjusted EBITDA margin over the prior year. Finally, let's turn to Retailer Services. Revenues declined approximately 6% to $229 million.
Christopher Robert Growe: Daily event activity measured in thousands per day increased by approximately 13%.
Christopher Robert Growe: Our teams did a terrific job leveraging our current infrastructure to support the volume growth in the quarter, which drove the improvement in adjusted EBITDA margin over the prior year.
Christopher Robert Growe: Finally, let's turn to of retailer services.
Christopher Robert Growe: Revenues declined approximately 6% to $229 million.
Christopher Robert Growe: Adjusted EBITDA was $20 million, an approximate 16% decline over the prior year, and an earlier Easter holiday limited in-store activities for our teams as retailers focused on execution. The timing of the holiday reversed in April, which will benefit the second quarter. We also faced a tough prior-year comparison when we completed in-story modeling activities that did not repeat this quarter.
Christopher Robert Growe: Adjusted EBITDA was $20 million, an approximate 16% decline over the prior year.
Christopher Robert Growe: An earlier Easter holiday and limited in store activities for our teams as retailers focus on execution.
Christopher Robert Growe: The timing of the holiday reversed in April which will benefit the second quarter.
Christopher Robert Growe: We also faced a tough prior year comparison, when we completed in store remodeling activities that did not repeat this quarter.
Christopher Robert Growe: We were able to offset some of these factors by implementing price increases, managing costs, and improving working capital management. Moving to our balance sheet, last month we repriced our $1.1 billion term loan from SOFR plus 450 basis points to SOFR plus 425 basis points. We are pleased with the demand from investors who support the work we are doing to advance our strategic objectives. The 25 basis point reduction is expected to save approximately $3 million in annualized interest expense at current debt levels. During the quarter, we voluntarily repurchased approximately $51 million in secured notes at attractive discounts.
Christopher Robert Growe: We were able to offset some of these factors by implementing price increases managing costs and improving working capital management.
Christopher Robert Growe: Moving to our balance sheet last month, we repriced, our $1 $1 billion term loan from silver plus 450 basis points to sulfur plus 425 basis points were.
Christopher Robert Growe: We are pleased with the demand from investors, who support the work we are doing to advance our strategic objectives.
Christopher Robert Growe: The 25 basis point reduction is expected to save approximately $3 million in annualized interest expense at current debt levels.
Christopher Robert Growe: During the quarter, we voluntarily repurchased approximately $51 million in secured notes at an attractive discount.
Christopher Robert Growe: As of March 31st, our total funded debt outstanding was approximately $1.8 billion, with nearly 90% of our debt hedged or at fixed interest rates. Our net leverage ratio was approximately 4.2 times, inclusive of discontinued operations. As we announced last quarter, our long-term target is to reduce the net leverage ratio to below three and a half times. We were active in the quarter with about $12 million in share repurchases and an additional $8 million in April.
Christopher Robert Growe: As of March 31, our total funded debt outstanding was approximately $1 8 billion.
Christopher Robert Growe: With nearly 90% of our debt hedged are at fixed interest rates.
Christopher Robert Growe: Our net leverage ratio was approximately four two times inclusive of discontinued operations as we announced last quarter. Our long term target is to reduce the net leverage ratio to below three five times.
Christopher Robert Growe: We were active in the quarter with about $12 million in share repurchases and an additional $8 million in April.
Christopher Robert Growe: We repurchased nearly 5 million shares to offset employee incentive-related dilution and to take advantage of what we believe is an undervalued stock price. The first quarter was busy with investments to execute our strategic objectives. CapEx was approximately $16 million, which was below our expectations but still in line with our plan to spend $90 million to $110 million this year. We are creating technology platforms for data modernization, cloud-based capabilities, including AI, and other tools to improve the operating efficiencies Dave described earlier. Despite these investments, we generated approximately $40 million in adjusted unlevered free cash flow, or 50% of adjusted EBITDA, inclusive of discontinued operations, representing another quarter of solid cash conversion.
Christopher Robert Growe: We repurchased nearly 5 million shares to offset employee incentive related dilution and to take advantage of what we believe is an undervalued stock price.
Christopher Robert Growe: The first quarter it was busy with investments to execute our strategic objectives.
Christopher Robert Growe: Capex was approximately $16 million, which was below our expectations, but still in line with our plan to spend $90 million to $110 million this year.
Christopher Robert Growe: We are creating technology platforms for data modernization cloud based capabilities, including AI and other tools to improve the operating efficiencies Dave described earlier.
Christopher Robert Growe: Despite these investments we generated approximately $40 million and adjusted Unlevered free cash flow or 50% of adjusted EBITDA inclusive of discontinued operations represented another quarter of solid cash conversion.
Christopher Robert Growe: We reaffirm our guidance for 2024, with revenues adjusted EBITDA expected to grow by low single digits. This means growth from a lower revenue in Justity Without Base in 2023 due to the announced Edlucin sale to Barclay OKRP. Creating the capacity to further prioritize core capabilities to provide clients with best-in-class services. Our guidance does not include the possible impact of future divestitures as we continue to evaluate opportunities for additional actions to focus on our core capabilities and pay down debt.
Christopher Robert Growe: We reaffirm our guidance for 2024 with revenues adjusted EBITDA expected to grow by low single digits.
Christopher Robert Growe: This means growth from our lower revenue and adjusted EBITDA base in 2023 due to the announced at Lucerne sale to Barkley, Okay RP.
Christopher Robert Growe: Creating the capacity to further prioritize core capabilities to clients with best in class services.
Christopher Robert Growe: Our guidance does not include the possible impact of future divestitures as we continue to evaluate opportunities for additional actions to focus on our core capabilities and pay down debt.
Christopher Robert Growe: Given the accelerated investments in technology and people and the impact of wage inflation, we now expect a greater weighting towards the year's second half to deliver our full year at Justitia Vida. Our guidance for book interest expense, unlevered free cash flow, and CapEx remains in place. The recent refinancing of our term loan will lead to lower interest expense, although this is captured within our guidance range. As I mentioned last quarter, 2024 is the year of investment to transform Advantage.
Christopher Robert Growe: Given the accelerated investments in technology and people and the impact of wage inflation, we now expect a greater weighting towards the year's second half to deliver our full year adjusted EBITDA.
Christopher Robert Growe: Our guidance for book interest expense Unlevered free cash flow and Capex remains in place.
Christopher Robert Growe: The recent refinancing of our term loan will lead to lower interest expense. Although this is captured within our guidance range.
Christopher Robert Growe: As I mentioned last quarter 2024 is a year of investment to transform advantaged.
Christopher Robert Growe: We accomplished a lot in the first quarter. Progress on our IT transformation remains on track, and we continue optimizing our business to improve execution and operational efficiency. What is underappreciated is that our plan to grow revenue and adjust EBITDA contemplates planned investments and actions to simplify the business. Our core values include leading with insights and executing relentlessly. I can't think of a better testament to our teammates' daily work and to enhanced capabilities than for us to achieve growth in a year of significant change to advance our strategic goals. Thank you for your time. I will now turn it back over to Dave.
Christopher Robert Growe: We accomplished a lot in the first quarter progress on our transformation remains on track and we continue optimizing our business to improve execution and operational efficiency.
Christopher Robert Growe: What is underappreciated is that our plan to grow revenue and adjusted EBITDA contemplates planned investments and actions to simplify the business. Our core values include leading with insights and executing relentlessly.
Christopher Robert Growe: I can't think of a better testament to our teammates daily work and to enhance capabilities than for us to achieve growth in a year of significant change to advance our strategic goals. Thank.
Christopher Robert Growe: Thank you for your time I will now turn it back over to Dave.
David A. Peacock: Thanks, Chris. Over the last six months, we have diligently and consistently worked to simplify our business and enhance our capabilities so we can better serve our CPG firms and retailers, who rely on us every day to succeed in the market. While this work will continue, I cannot thank our team enough for their focus, dedication, and persistence in staying on task. We remain on track to achieve our objectives this year across the organization.
David A. Peacock: Thanks, Chris over the last six months, we have diligently and consistently work to simplify our business and enhance our capabilities. So we can better serve our CPG firms and retailers rely on US every day to win in the market well.
David A. Peacock: While this work will continue I cannot thank our team enough for their focus dedication and persistence and staying on task.
David A. Peacock: We remain on track to achieve our objectives. This year across the organization. We are implementing the right plans to expand our competitive advantages and become our clients and customers strategic provider of choice.
David A. Peacock: We are implementing the right plans to expand our competitive advantages and become our clients' and customers' strategic provider of choice. Our scale, capabilities, and deep understanding of the consumer industry position us to win, which ultimately will drive growth and value creation for our shareholders. We will now take your questions, Operator. Thank you.
David A. Peacock: Our scale capabilities and deep understanding of the consumer industry position us to win which ultimately will drive growth and value creation for our shareholders.
Speaker Change: We'll now take your questions operator.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in. You may press star 2 if you would like to withdraw your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
Speaker Change: Thank you.
Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad E.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May press star two if he would like to withdraw your question for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Joe Vasi with Canaccord Genuity. Please proceed with your question.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: Our first question comes from the line of Joe <unk> with Canaccord Genuity. Please proceed with your question.
David A. Peacock: Good morning. This is Balaseni speaking on behalf of Joe. Thanks for taking our questions. My first question is on the macro. Is it fair to say that your clients are incrementally more cautious, but they're still Prioritizing strategic initiatives like private label, digital programs, etc.? And are you seeing any changes to the pace of implementation of these programs given the more cautious outlook here, perhaps?
Speaker Change: Good morning. This is about us any on for Joe. Thanks for taking our questions. My first question is on the macro is it fair to say that our clients are.
Joe: Incrementally more cautious, but they're standalone.
Joe: Advertising strategic initiatives like private label data programs et cetera, and are you seeing any changes to the pace of implementation of these programs given given the more cautious outlook can perhaps.
David A. Peacock: Thanks for the question. I think, you know, we saw a couple of things from a macro standpoint in the market. Obviously, there's, you know, economic uncertainty in the market. And I would argue that a lot of consumers, especially those a little bit on the lower end of the economic spectrum, are being pinched by the current environment of continued inflation and just challenges within the economy that have driven private label growth in business.
Speaker Change: Thanks for the question.
Speaker Change: I think we saw.
Speaker Change: A couple of things from a macro standpoint in the market. Obviously, there is economic uncertainty in the market and I would argue that.
Speaker Change: A lot of consumers, especially.
Speaker Change: A little bit on the lower end of the economic spectrum.
David A. Peacock: We're seeing unit growth overall in private label and a strong business there. I'd say, when you look at the branded services side of our business, We saw some de-stocking at the retail level, as well as a slowdown and point of sale, product or volume movement, or dollar movement overall. And this is talking about the entire consumer category. So I think fundamentally that some of that is short-term in the sense that, you know, if retailers are reducing inventory, that's not going to continue throughout the year.
David A. Peacock: They do that over kind of a one-time period, and that had an impact on revenues for the branded services area. But from a client standpoint, we see them. [inaudible] objective between our CPG clients and our retailer customers.
Speaker Change: Aggressively trying to drive unit growth.
Speaker Change: From a CPG standpoint, and really from a retailer standpoint, so theres actually a the convergence and objective between our CPG clients in our retailer customers.
Christopher Robert Growe: Hey, Paul, it's Chris Growe. I might just add a quick comment to that. Just that there was, as Dave mentioned, a little softer start to the year. We did see that improve, though, throughout the quarter. So I think that's just one thing to keep in mind. And secondarily, you know, we've talked about, and you can see it in the experiential business, a nice improvement there in volume and, you know, really execution on our part.
Speaker Change: Hey, Paul Thanks, Scott and Mike I might.
Speaker Change: Just add a quick comment to that just that there was a as Dave mentioned, a little softer start to the year, we did see that improve though throughout the quarter. So I think that's just one thing to keep in mind.
Speaker Change: And secondarily, we've talked about and you can see it in the experiential business a nice improvement there in volume and execution on our part but beyond that really just an increase in volume overall. So we are seeing some of that activity.
Christopher Robert Growe: But beyond that, really just an increase in volume overall. So we are seeing some of that activity, you know, investment, if you will, from our clients that we're benefiting from on the other side, on the experiential side.
Speaker Change: Activity investment if you will from our clients that we're benefiting from on the other side on the experiential side.
Christopher Robert Growe: Thanks. Thanks, Dave and Chris. That's that's helpful. And just to follow up on that, Chris, what type of growth is embedded in your 24-month outlook for experiential services?
Speaker Change: Thanks, Thanks, Kevin.
Kevin: Helpful and just a follow up to that Chris what what type of growth is Mb.
Christopher Robert Growe: Embedded in your 24 outlook for experiential services.
Christopher Robert Growe: So we're not going to give guidance by segment, and I think you know this is obviously the first time we're showing you the segments, and we'll have more information, you know, to move forward on that. I would just say that you know we're seeing a nice recovery here and continued recovery in volume, and we're also seeing strong price realization in that business. I know we're really focusing more on metrics in that business that denote profitability, but I would just tell you that in the quarter, we were 88% of 2019 volumes in the demonstration business and 88% of 2019 volumes in the experiential business.
Christopher Robert Growe: So we're not going to give guidance by segment.
Speaker Change: And I think this is obviously this is the first time, we're showing you the segments and we'll have more information.
Speaker Change: We move forward on that I would just say that we're seeing a nice recovery here and continued recovery in volume and we're also seeing strong price realization in that business.
Speaker Change: So we are really focusing more on metrics in that business.
Speaker Change: The note profitability, but I would just tell you that in the quarter, we were like 88% of 2019 volumes and demonstrating the demonstration business experiential business. So we saw a nice.
Christopher Robert Growe: So we saw a nice sequential increase in the level of activity in that business, and that may give you some feel for the rate of growth throughout the year. We do expect it to continue to grow sequentially through the year.
Speaker Change: Sequential increase in level of activity in that business and let me give you some feel for the rate of growth throughout the year. We should do you expect it to continue to grow.
Speaker Change: Sequentially through the year.
Christopher Robert Growe: Great, thanks. Thanks for the color, Chris.
Speaker Change: Great. Thanks, Thanks for that Chris and just last one from me.
Speaker Change: You've been pretty active and simplifying the portfolio.
David A. Peacock: And just last one from me, you've been pretty active in simplifying the portfolio over the last six months or so. How do you see the composition of the portfolio now? Is there opportunity for further refinement here? Thanks.
Speaker Change: Over the last six months or so how do you see the composition of the portfolio. Now is there is there opportunity for Florida area assignment here. Thanks, guys.
David A. Peacock: Yeah, Paulo, there is, and we continue to be active in that space, and as you're probably seeing, there's a movement to get to our core business, and I think as we get through this process and especially get into the summer, that'll become even more clear, and I think we'll be able to speak a lot more openly about, you know, what that core business is and where we see it going, but I can As we're simultaneously, you know, looking at our portfolio and, as you said, making Decisions to Simplify, and so on. Great Thanks again.
Speaker Change: Yes.
Speaker Change: There is and we continue to be active in that space and.
Speaker Change: As Youre seeing probably there is a movement.
Operator: Thank you. Our next question comes from the line of Faziwa Alwy with Deutsche Bank. Please proceed with your question.
Speaker Change: Movement to get to our core business.
Speaker Change: And I think as we get through this process and especially get into the summer that will become even more clear.
Speaker Change: And then I think we'll be able to speak a lot more openly about.
Speaker Change: What that core businesses and we're actually we see it going.
Speaker Change: But I can assure you that the resources.
Speaker Change: That we are devoting to growth acceleration.
Speaker Change: And cost management are really focused on our core businesses as we're simultaneously.
Speaker Change: Looking at our portfolio and as you said, making some decisions to simplify and sell off some businesses.
Speaker Change: Great. Thanks again.
Speaker Change: Thank you.
Operator: Yes, hi. Thank you. I think that's me, Faiza.
Speaker Change: Thank you. Our next question comes from the line of Aussie Y O Y with Deutsche Bank. Please proceed with your question.
Operator: So I wanted to ask about the higher costs that you mentioned. It sounds like it was a function of, you know, higher planned investments. I think there was some inflation in there, and then maybe higher costs that
Speaker Change: Yes, hi, Thank you I think that's me visa.
Speaker Change: Right.
Speaker Change: Hi, So I wanted to ask about the higher costs that you mentioned it sounds like it was a function of higher planned investments I think there was some inflation in there and then maybe higher costs that were.
Speaker Change: Not absorbed because of the divestitures, but just give us a bit more color around that and I think you mentioned sort of costs improving through the course of the year.
Speaker Change: Maybe talk about how we should think about about all of that.
Christopher Robert Growe: Yeah, Faiza, I appreciate the question. So I think you're probably focused on the branded services area. So, I think you hit on a couple of key things. One, you've got a lot of the transformation and some of the portfolio work, frankly, going on in that segment. As you noted, And then, like you said, a lot of that was planned. And then, I think the other thing, we had client exits, so not necessarily divestitures, but client exits that were intentional, that occurred in the quarter.
Speaker Change: Yeah.
Operator: I appreciate the question so I.
Speaker Change: I think youre, probably focused on the branded services area. So and I think you hit on a couple of key things one you've got.
Christopher Robert Growe: A lot of the transformation and some of the portfolio work frankly going on in that segment.
Christopher Robert Growe: As you noted.
Speaker Change: And then and like you said, there's a lot of that was planned.
Speaker Change: And then I think the other thing we had client exits so not necessarily divestitures with client exits that were intentional that occurred in the quarter and I think the timing of that because they were kind of intra quarter. If you will made it. So that we had you know cost absorption issues relative to taking.
Christopher Robert Growe: And I think the timing of that, because they were kind of intra-quarter, if you will, made it so that we had cost absorption issues relative to taking the costs out related to those client exits. And as you can imagine,
Christopher Robert Growe: The costs out related to those client exits in and as you can imagine these are largely people businesses. So we've got to serve those clients.
Christopher Robert Growe: And serve them well up until the day of exit and when you do that it obviously can impact your timing as it relates to rationalizing the organization. So really that was the issue and we do anticipate cost improving as we go forward based on actions that were taken or have already taken for instance on those client exits we've really.
Christopher Robert Growe: Adjusted the workforce to reflect that going forward very early in the second quarter.
Christopher Robert Growe: Okay, and then you mentioned wage inflation. We haven't really heard that from a lot of other companies in terms of inflation reaccelerating. I want to talk about that. I know you mentioned, maybe you might have used the word persistent.
Speaker Change: Okay, and then you mentioned wage inflation.
Christopher Robert Growe: We haven't really heard that from a lot of other companies in terms of.
Christopher Robert Growe: Inflations or maybe it would be accelerating so just wanted to I wanted to talk about that I think are you talking about I know you mentioned, maybe maybe you might have used the word.
Christopher Robert Growe: Distant so give us a sense of where we are and wage inflation and do you need should we be expecting incremental pricing because you said price realization did not fully cover those inflationary pressures and where and when should we should we see that.
Christopher Robert Growe: Give us a sense of where we are in wage inflation. Should we be expecting incremental pricing? You said price realization did not fully cover those inflationary pressures. Where and when should we see that?
Speaker Change: Right so.
Christopher Robert Growe: Right. So, when you look at our business, obviously, as we described a minute ago, it's a lot of people, and we actually have a lot of transportation as it relates to the workforce moving around, if you will, to serve the business. And so you look at a couple cost areas. Wage inflation continued to be, you know, persistent, and higher than we expected. It wasn't necessarily higher than, you know, past quarters or even maybe last year, but it was higher than we expected.
Christopher Robert Growe: When you look at our business, obviously as we've described a minute ago, it's a lot of people.
Christopher Robert Growe: And we absolutely I actually have a lot of transportation as it relates to workforce moving around if you will to service the business and so you look at a couple of cost areas wage inflation.
Christopher Robert Growe: <unk> continued to be persistent was higher than we expected.
Christopher Robert Growe: It wasn't necessarily higher than.
Christopher Robert Growe: Past quarters or or even maybe last year, but it was higher than we expected.
Christopher Robert Growe: And then you have things like gas prices that, you know, you've seen more recently kind of take up in certain markets and a lot of markets. So those are the areas where we see inflation flow through. And for us, it's just making sure that we're managing the business, one, to be as cost efficient as possible when those situations arise. And then two, as you said.
Christopher Robert Growe: And and then you have things like gas prices that <unk> seen more recently to kind of tick up in certain markets and a lot of market. So those are the areas, where we see the inflation flow through and for US. It's just making sure that we're managing the business wanted to be as cost efficient as possible when those situations arise.
Christopher Robert Growe: And then two as you said.
Christopher Robert Growe: In the areas where we're able to, you know, realize a price for that, and obviously, in parts of our business, we actually have contracts structured where it could be a cost-plus situation or a commission situation where, you know, pricing's not really the issue. And so there's kind of a natural price flow through, if you will, depending on the revenues for our clients when it's a commission situation or the specific costs, you know, the cost environment we may be facing.
Christopher Robert Growe: And the areas, where we're able to.
Christopher Robert Growe:
Christopher Robert Growe: Is it price for that and obviously in parts of our business, we actually have.
Christopher Robert Growe: Contract structured where it could be a cost plus situation or a commission situation, where pricing is not really the issue.
Christopher Robert Growe: And so there's kind of a natural price flow through if you will depending on the revenues for our clients when it's a commission situation or.
Christopher Robert Growe: Or the specific cost.
Christopher Robert Growe: The cost environment, we may be facing.
Christopher Robert Growe: Faiza, if I could just add to that. I would just say that in the first quarter, there were a number of, I'll call them regulatory changes that did support increased wages in the quarter. These all happened on January 1. And as I look across our business, the labor inflation was persistent, not an acceleration or re-acceleration, simply persistent. And we looked at the year, and we're looking at the year with a rate of inflation in that, let's call it, a low to mid-single-digit level. And last year, we were definitely in the mid-single-digits, and I think in the first quarter, it kind of continued into that mid-single-digit area.
Speaker Change: If I could if I could just add to that.
Speaker Change: I would just say that in the first quarter there were a number of.
Christopher Robert Growe: I'll call it regulatory changes that did support increased wages in the quarter. Those all happened January one.
Christopher Robert Growe: And as I look across our business the labor inflation was persistent not an acceleration or reacceleration simply persistent.
Speaker Change: We looked at the year and we're looking at the year.
Christopher Robert Growe: With the rate of inflation.
Speaker Change: Let's call it low to mid single digit level.
Christopher Robert Growe: And then last year, we were definitely in the mid single digits and I think you are in the first quarter kind of continued into that mid single digit area. So I think the point I'd make is just that theres inflation that it was a little higher level than we thought we think it'll level out a bit from here now most important is how we're attacking that right. So we're looking at our costs, obviously and David mentioned that we're looking at we obviously are pricing initiatives in place.
Christopher Robert Growe: So I think the point I'd make is just that there's inflation at a slightly higher level than we thought. We think it'll level out a bit from here. Now, most important is how we're attacking that, right? So we're looking at our costs, obviously, and Dave has mentioned that. We're looking at, obviously, pricing initiatives in place that we can use to offset some of that. We're looking at managing our mix, all the things we can do in that suite of tools we have to try to manage that inflation across the year.
Christopher Robert Growe: That we can use to offset some of that we're looking at managing our mix all of the things. We can do in our in our suite of tools, we have to try to manage that inflation across the year.
Christopher Robert Growe: Okay, got it. And then just last one, you mentioned improved results in March, which appear to be continuing in April. So what's driving that? Is it just that you're done with sort of the inventory rationalization? Or is there something else from a macro perspective? Or you know, something else that's unique to you?
Speaker Change: Okay got it.
Christopher Robert Growe: And then just last one you mentioned improved results in March which appear to be continuing in April and sort of what what's driving that is it just said youre done with sort of the you know.
Christopher Robert Growe: The inventory rationalization or is there something else from a from a macro perspective or something else that's unique to you.
Christopher Robert Growe: I think you've hit the nail on the head. I mean, the inventory rationalization, while it may be occurring a bit, as I mentioned earlier, it can be a bit transitory, right? Once you adjust your inventories, you sort of operate from that base going forward. So we're seeing overall, you know, better shipments for our clients collectively. We talked about in the retailer segment that there was an Easter shift. And so that business, a big part of that business, can be affected by the timing of Easter.
Speaker Change: I think I think you hit the nail on the head I mean, you used.
Christopher Robert Growe: Sorry rationalization, while it may be occurring a bit as I mentioned.
Christopher Robert Growe: Earlier, it can be a bit transitory right. Once you adjust your inventories you sort of operate from that base going forward.
Christopher Robert Growe: So we're seeing overall better shipments hum for our clients collectively.
Christopher Robert Growe:
Christopher Robert Growe: We talked about in the retailer segment, but there was an Easter shift and so that that business a big part of that business can be affected by the timing of Easter and it moved into first quarter and the work some of the work they do in store frankly.
Christopher Robert Growe: And it moved into the first quarter. And the work, some of the work they do in store, frankly, you know, it decreases pretty significantly right ahead of holidays. And so that we saw a reversal of that in the month of April. So that's another example in the different segments and retailer segments where we saw that. And then I mentioned earlier as well that we've taken actions on the cost side that really reflect the client exits that we had in the first quarter. And so that should flow through as we go forward in the second quarter. We're starting to see some of that in the early numbers for April.
Christopher Robert Growe: Reduces pretty significantly right ahead of holidays, and so that we saw a reversal of in the month of April. So that's another example in different segment and retailer segment, where we saw that and then I mentioned earlier as well that we've taken actions on the cost side that really reflect the client.
Christopher Robert Growe: Exits that we had in the first quarter.
Christopher Robert Growe: So that should flow through as we go forward in the second quarter and we're starting to see some of that in the early numbers for April.
Operator: Excellent. Thank you so much.
Speaker Change: Excellent. Thank you so much thank you.
Operator: Yes.
David A. Peacock: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Dave Peacock for closing comments. Thank you.
Operator: Thank you there are no further questions at this time I'd like to turn the floor back over to Dave Peacock for closing comments.
David A. Peacock: Thank you, Operator. We appreciate your time this morning and your interest in Advantage Solutions. We are excited about our prospects this year and look forward to updating you on the progress we have made to expand our competitive advantages as a partner of choice with clients and customers. Thanks again for your time today.
David A. Peacock: Thank you operator, we appreciate your time this morning, and your interest in advantaged solutions. We are excited about our prospects. This year and look forward to updating you on the progress to expand our competitive advantages as a partner of choice with clients and customers. Thanks again for your time today.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Okay.
Operator: Okay.
Operator:
Operator: Hum.
Operator: Hum.
Operator: Hum.
Operator: Hum.
Operator: Hum.
Operator: [music].
Operator: [music].
Operator: Mhm.
Operator: Hum.
Operator:
Operator: Hello.
Operator: Oh.
Operator: [music].
Operator: [music].
Operator: No.
Operator: Uh huh.
Operator: [music].
unknown: Sean Choksi, David Peacock, Unknown Executive, Kimberly Esterkin, Sean Choksi, David Peacock, Unknown Executive, Sean Choksi, David Peacock, Sean Choksi, David Peacock, Unknown Executive, Kimberly Esterkin, Sean Choksi, David Peacock, Unknown Executive, Kimberly Esterkin, Sean Choksi, David Peacock, Unknown Executive,
Operator: Hum.
unknown: Yeah.
unknown: Yeah.
unknown: Okay.
unknown: Yeah.
unknown: Hum.
unknown: Okay.
unknown: Yes.
unknown: Yeah.
unknown: Okay.
unknown: Yeah.
unknown: Okay.
unknown: Yeah.
unknown: Okay.
unknown:
unknown: [music] Hum.
unknown: Hum.
unknown: [music].
unknown: Uh-huh Oh.
unknown: [music].
unknown: Hum.
unknown: Hum.
unknown: [music] Hum.
unknown: Hum.
unknown: Hum.
unknown: Hum.
unknown: [music].
unknown: Yeah.
unknown:
unknown: Uh huh.
unknown: Hum.
unknown: [music].
unknown: [music].
unknown: Sure.
unknown: Oh.
unknown: [music].
unknown: Oh.
unknown: [music].
unknown: Hum.
unknown: [music].
unknown: Okay.
unknown: [music].
unknown: Uh huh.
unknown: [music].
unknown: Hum.
unknown: Hum.
unknown: [music].
unknown: Hum.
unknown:
unknown: Yeah.
unknown: Okay.
unknown: Okay.
unknown: Hum.
unknown: [music].
unknown: Okay.
unknown: [music].
unknown: Okay.
unknown: Mhm.
unknown: Okay.
unknown: Hum.
unknown: Hum.
unknown: Oh.
unknown: Mhm.
unknown: Hum.
unknown: [music].