Q2 2025 Advantage Solutions Inc Earnings Call

Speaker #2: To ask a question during the session, press star one on your telephone keypad. A confirmation tone will indicate that your line is in question queue.

Speaker #2: 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 Ruben Mella, Vice President of Investor Relations.

Speaker #2: Thank you. And Ruben, you may begin.

Speaker #3: Thank you, operator. Welcome to Advantage Solutions second quarter 2025 earnings conference call. Dave Peacock, Chief Executive Officer and Chris Growe, Chief Financial Officer, are on the call today.

Speaker #3: Dave and Chris will provide the prepared remarks after which we will open the call for a question and answer session. During this call, management may make forward-looking statements within the meaning of the Federal Securities Laws.

Speaker #3: Actual outcomes and results could differ materially due to several factors, including those described more fully in the company's annual report on Form 10K filed with the SEC.

Speaker #3: All forward-looking statements are qualified in their entirety by such factors. Our marks today include certain non-GAAP financial measures, which are reconciled to the most comparable GAAP measure in our earnings release.

Speaker #3: As a reminder, unless otherwise stated, the financial results discussed today will be from continuing operations and revenues will exclude pass-through costs. And now, I would like to turn the call over to Dave Peacock.

Speaker #4: Thanks, Ruben. Good morning, everyone. Thank you for joining us. Before we get started, I want to thank our teammates for their continued commitment to successfully serving our clients who continue to navigate ongoing market uncertainty.

Speaker #4: Our second quarter revenues of $736,000,000 and adjusted EBITDA of $86,000,000 were down 2% and 4%, respectively, from the prior year. Our performance was in line with our internal plan, and we are pleased with the sequential improvement in the business relative to the first quarter.

Speaker #4: We made solid progress toward resolving the first quarter staffing shortfall, abling both our experiential and retailer services teams to increase execution volume. This operational improvement contributed to year-over-year adjusted EBITDA growth across both segments.

Speaker #4: As of July, staffing is largely returned desired levels for the second half of the year, and we are confident in our ability to continue to recruit and retain personnel to meet client demand.

Speaker #4: Our financial results continue to be impacted by a client loss and branded services last year, which accounted for the entirety the company's EBITDA decline.

Speaker #4: Additionally, we continue to invest in our transformation initiatives. We await profitability in the quarter. Both of these items will be mostly lapped on a year-over-year basis starting in Q3.

Speaker #4: Given our scale serving over 4,000 clients and retail stores operating in over 90% of zip codes, we have a unique perspective on the US consumer.

Speaker #4: In recent months, we surveyed thousands of shoppers alongside a broad cross-section our CPG and retailer clients to gain a deeper understanding of the evolving macroeconomic environment.

Speaker #4: While consumer health remains pressured and value-seeking behaviors remain prevalent, our findings reveal several actionable insights. Specifically, our merchandising supply chain, product sampling, and private brand development services are essential offerings to help clients in this environment and optimize their return on investment.

Speaker #4: Retailers tell us that they lose nearly 40% of potential sales when a product is not carried or is out of stock. Our chandising teams deliver a strong ROI for CPGs and retailers by ensuring that products are properly placed and advertised at the right price points, in-store signage is optimized, and that there is an ample supply of product on shelf and on display.

Speaker #4: Nearly 65% of retailers told us that their supply chains are evolving in response to trade disruptions. As part of our end-to-end retail services, we provide a full suite of logistics services that help clients diversify their sourcing and deliver products to store shelves consistently and efficiently.

Speaker #4: Finally, 85% of retailers in our survey are prioritizing private brands to address channel shifting and shopper preferences. Our market-leading private brand advisory and execution business, called Daemon, offers end-to-end capabilities with access to over 6,000 supplier partners and leading private brand design capabilities, having won over 30 awards this year for best-in-class work.

Speaker #4: These are just a few examples of Tailwinds and parts of our service portfolio that are driving a healthy new business pipeline. We are engaging with prospective clients and demonstrating our value proposition to generate attractive returns.

Speaker #4: We are encouraged by the success to date renewing existing relationships and securing new service wins as we continue to work through a longer-than-normal sales cycle.

Speaker #4: For example, we recently helped a client, AG1, with their transition from exclusively direct-to-consumer to a national entry into retail. We partnered with them for a retail launch earlier this summer through our branded services brokerage team, while also supporting them with an aggressive sampling program through our experiential team.

Speaker #4: The results have exceeded expectations, positioning AG1 for future success at retail. This shows how we can leverage the different parts of our business to drive sales for our lients.

Speaker #4: Turning to our segments and beginning with branded services, clients continue to prioritize cost optimization as they adapt their supply chains, manage elevated input costs, and respond to evolving channel shifts.

Speaker #4: This has resulted in more in-sourcing of select services, a reduction in order volume, and a pullback in sales and marketing investments. These headwinds have mostly impacted our brokerage and omni-commerce marketing offerings in the first half of the year, while demand for the bar merchandising and supply chain services has remained steady.

Speaker #4: As we enter the second half, we expect sequential improvement for our branded services as we lap client exits and losses realized in the first half, the materialization of new business wins, and streamlined operations as our transformation-enabled technology and analytics advancements are driving faster and more efficient processes in this area.

Speaker #4: Within experiential services, the recovery from the staffing shortfall in Q1 led to a year-over-year increase in events executed in the quarter. Events per day grew approximately 1% and were up 5%, excluding the loss of a client last year who chose not to sample in-store any longer.

Speaker #4: The demand for sampling and other experiential projects remains favorable for the second half of the year, particularly for our largest clients. This is typical of seasonality favors the second half, and we are optimistic as some of our centralized labor management efforts are beginning to help us drive talent attraction and retention.

Speaker #4: In retailer services, recovery and staffing levels and improved project activity led to growth in the quarter. Retailers are continuing to seek our merchandising services at increasing levels due to their own labor shortages and the efficiency we bring in a more variable work environment.

Speaker #4: While staffing levels support our plan for the second half of the year, we will face a difficult prior-year comparison and unfavorable project timing in Q3 but expect a more favorable comparison in the fourth quarter.

Speaker #4: We continue to invest in delivering a higher ROI and service level for our CPG clients and retail customers. We remain on track to complete the implementation of our data architecture and system foundation by 2026.

Speaker #4: These projects are helping us deliver value today to our clients. We are delivering category insights and intelligence at an accelerated rate to unlock growth opportunities through our data lake-powered dashboards deploying image recognition technology for more than 1,000 brokerage clients across 800-plus subcategories.

Speaker #4: This will help our in-store and sales teams work faster and with more accuracy as they leverage better insights and distribution and decisions. Specifically, we are integrating retail point of sale, shopper panel, geodemographic data, as well as advantages proprietary in-store execution data to help our teams identify distribution opportunities, competitive gaps, and monitor innovation performance in almost real time.

Speaker #4: This helps clients maximize outcomes and retailers meet shifts and shopper behavior. In addition, our count managers can now evaluate promotional performance at a highly granular level, helping CPG companies maximize their return on trade spend and drive higher ROI per dollar.

Speaker #4: As we look to the future, we're vancing the development of our new pulse system, an AI-enabled end-to-end decision engine designed to elevate the speed, precision, and impact of commercial decision-making across sales and chandising.

Speaker #4: This next-generation platform will seamlessly integrate advantages data intelligence, including unique retail data, with dynamic real-time capabilities, augmenting our team's ability to anticipate demand, prioritize actions, and drive efficiency across client workflows.

Speaker #4: Shifting to our people and processes, we are continuing to invest behind implementation of a centralized labor management model that we expect will be operational starting in early 2026.

Speaker #4: And Workday's human capital management system that will be available in 2027. This new strategy for centralized labor management is designed to yield benefits in three areas.

Speaker #4: First is labor utilization. We remain committed to achieving at least a 30% lift in ailable hours for teammates. The number one concern our teammates have when I speak to them is the inability to get enough hours with us.

Speaker #4: More available hours will increase retention and productivity with a more tenured staff. The second is improving teammate experience, which we expect will create a win-win scenario for our teammates and clients as we drive retention even higher; this is manifest in the speed of our application to hire process all the way to route scheduling.

Speaker #4: Third is efficiency. We are investing in technology enablers to drive improved teammate and ustomer engagement. One example is the deployment of AI-assisted staffing across our retail customers.

Speaker #4: The pilot program underway is validating these objectives as teammate utilization and retention rates continue to outpace non-pilot market performance. We remain on track to continue scaling and refining the pilot program to support the broad-scale rollout of the centralized labor model throughout the second half of 2025 and early 2026.

Speaker #4: Taking current market conditions into account alongside our investment and operational execution plans, we are reaffirming our 2025 guidance, projecting revenue and adjusted EBITDA to be flat to down low single digits compared to the prior year.

Speaker #4: The confidence in our outlook comes from favorable demand signals for experiential and retail merchandising services, as well as expectations for sequentially improving trends in branded services.

Speaker #4: The majority of our business is well-positioned to partner with clients as we deploy our enhanced capabilities to strengthen our value proposition in other areas.

Speaker #4: We also expect a reduction in year-over-year shared service costs in the second half the year, supported by savings derived from leveraging the IT system upgrades.

Speaker #4: As Chris will discuss in more detail, we expect cash generation in the back half of this year to be above normalized levels, excluding the unique year-end payroll timing shift from January to December, as we transition from the heavier part of the transformation investment to the acceleration phase and continuous improvement.

Speaker #4: Our business is designed efficient and consistent cash generation, and we expect to return to our typical net-free cash flow conversion rate of at ast 25% of adjusted EBITDA next year, and beyond, as our transformation improves our services, and modernizes our processes, for more consistent and efficient results.

Speaker #4: I'll now pass it over to Chris for more details on our performance and guidance.

Speaker #3: Thank you, Dave, and welcome to all of you joining the call today. I will review our second quarter 2025 performance by segment, discuss our cash flow and capital structure, and expand on Dave's guidance commentary.

Speaker #3: In branded services, we generate a $257 million of revenues and $34 million of adjusted EBITDA down 10% in 21% on a year-over-year basis, respectively.

Speaker #3: This segment continues to experience challenges namely within brokerage and omni-commerce marketing, which we are working expeditiously to address. While of the declines are business-specific, including the aforementioned client loss from last year, which accounted for more than one-third of the segment EBITDA decline, we also continue to combat a difficult macroeconomic backdrop.

Speaker #3: In experiential services, we generated $249 million of revenues and $26 million of adjusted EBITDA, up 6% in 14% on a year-over-year basis, respectively. The recovery in staffing levels enabled our teams to execute more events in the quarter.

Speaker #3: Events per day increased 1% versus the prior year, and were up 5%, excluding the client loss last year. Execution rates were approximately 93% on greater volume.

Speaker #3: As a result, margins returned to expected levels, expanding by approximately 80 basis points year-over-year to 10.4%. In retailer services, on a year-over-year basis, revenues were down slightly to $231 million, and adjusted EBITDA grew 8% to $26 million.

Speaker #3: Merchandising activity increased in the quarter due to improved staffing levels, and uptick in project activity, including a pull forward from the third quarter. And diligence in pricing to manage rising labor costs.

Speaker #3: Partially offsetting these items was softness in advisory and agency work, where we were impacted by the continued unfavorable channel mix. I would note that for both experiential and retailer services, higher shared service costs and a higher allocation of those dollars weighed on profit growth in the quarter.

Speaker #3: Moving to balance sheet and cash flow, we ended the quarter with a $103 million of cash on hand, reflective of a heavier use of working capital in the first half of the year.

Speaker #3: As a result, we did not repurchase debt or shares in the quarter. We received $22.5 million in proceeds on July 31st, related to the first of two deferred purchase price installments for June Group.

Speaker #3: With cash on hand, these proceeds expectations for stronger cash generation in the second half the year, and approximately $400 million available on the untapped revolving credit facility, we have ample liquidity to operate the business in the current macroeconomic climate, while investing for growth and opportunistically paying down debt.

Speaker #3: Our net leverage ratio was approximately 4.6 times of justed EBITDA, including discontinued operations. We expect this level to taper over the balance of the year.

Speaker #3: Turning to cash generation, we ended the quarter at approximately 70 days of sales outstanding, a one-day improvement from the first quarter, as cash collections began to recover after the cutover to new ERP system.

Speaker #3: The vast majority of the company is now on the new system, and we expect DSOs to decrease in the second half of the year.

Speaker #3: CapEx in the quarter was $2 million, due to the timing of transformation investments, and a significant under-capitalization of labor. We now expect CapEx to end the year in the range of $50 million to $60 million, below our original guidance.

Speaker #3: Adjusted unlevered free cash flow was $57 million, and the conversion rate was 66%, driven by the lower-than-expected CapEx. As Dave highlighted, we are maintaining our full-year guidance.

Speaker #3: We expect shared service costs to decline year-over-year the second half of the year. Headcount has decreased by approximately 8% in finance and IT since the end of last year, due to the use of automation and technology to streamline back-office functions.

Speaker #3: We also expect restructuring and reorganization costs for the full year to decline by roughly 50% compared to 2024. Branded services will remain under pressure, but we anticipate that the top line will start moving towards stabilization by the end of this year and into early 2026.

Speaker #3: From a seasonality perspective, the second half of the year is the peak season for experiential and retailer services. As Dave mentioned, retailer services faces a difficult third quarter, due to project timing and year-over-year discrete comparison factors.

Speaker #3: But we do expect a favorable comparison in the fourth quarter. Full-year adjusted EBITDA margins should mostly in line with the prior year, during this period of transformation investment.

Speaker #3: We continue to expect 2025 adjusted unlevered free cash flow to be over 50% of adjusted BITDA. Cash generation is expected to improve in Q3 and Q4, from an artificially low level in the first half of this year.

Speaker #3: Excluding the approximately $45 million year-end payroll timing shift into 2025, we anticipate adjusted unlevered free cash flow conversion of roughly 100%, and net free cash flow conversion exceeding 30% in the second half of the year.

Speaker #3: We are targeting a net free cash flow conversion rate of at ast 25% next year and beyond, turning more in line with the performance in 2023 before the strategic investment in the transformation.

Speaker #3: Interest expense remains in the range of $140 million to $150 million, assuming no additional debt repurchases. Thank you for your time, and we'll now turn it back over to Dave.

Speaker #3: Thanks, Chris. We believe ur expertise and range of services position us well to navigate the current macroeconomic environment with resilience and agility. At the same time, we will continue to make progress toward completing the strategic initiatives that will enable advantage to reach its full potential as a technology-driven, industry-leading service provider and generate meaningful cash flow for our shareholders.

Speaker #3: Operator, we are now ready for the Q&A session.

Speaker #2: Thank you. We will now be conducting a question and answer session. If ou would like to ask a estion, please press star one on our telephone keypad.

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Speaker #2: Our first question is from Faiza Alway of Deutsche Bank. Please proceed with your estion.

Speaker #5: All right. Great. Thank you. Good morning. I wanted to ask about branded services and the investment reductions that you talked that are impacting the brokerage and omni-commerce marketing services.

Speaker #5: I'm curious, is that are you seeing that across the board, or is that specific to, you know, a particular type of type of customer, whether it's, you ow, large versus small or a category?

Speaker #5: And then, like, are there are there signs of that improving? Because you talked about stabilization by the end of the year. So just curious if that's driven by something else, whether it's new business, or are you ecting these these market headwinds to improve?

Speaker #3: Hi, Faiza. This is Dave. I appreciate the estion. So I'd say the reductions that we reference really depend on the client and their situation.

Speaker #3: Within the marketplace, so it's not a pattern that we recognize across all our clients. Nor is it even category-specific. It's almost company-specific. But you are seeing that.

Speaker #3: I'd say a little more so on the marketing side, which is obviously a smaller piece of our business than on the sales agency side.

Speaker #3: It's been reported pretty broadly that you're seeing some pullback in marketing to consumers. But, and then, as we get into the second half, one, we were lapping the client loss we referenced in the first half that we largely are going to be past as we get into the third quarter.

Speaker #3: Just a little of economic share in July. And then we've got wins that we've got client wins that could be smaller, but when you add them up, they're meaningful that should help with sequential growth as we get into the second half.

Speaker #5: Understood. And then, you ow, you talked about the new workforce system and it sounds like that's, you know, you're it's basically going to be available in the second half.

Speaker #5: So talk a bit more about, you ow, you mentioned more subjectively. Some of the benefits that you're ecting, I guess, what does that mean in terms of, ou know, whether it's EBITDA margin uplift?

Speaker #5: And maybe more generally, as you think about the transformation costs, like, are we towards the end of the transformation costs? And just help us into where we are in the cycle of one, costs, and two, you know, achieving, starting to achieve some of the benefits, of implementing these new systems.

Speaker #3: Sure. Absolutely. And that's kind two questions, which is good because I can tackle them both. And I'll start with the latter first. So I'm kind of transformation costs, we are.

Speaker #3: We're seeing pretty significant reductions in restructuring costs in one time. Cost that would be, you ow, help again, just against EBITDA. In fact, year to date, we're about half of the level that we were this time last year.

Speaker #3: And we're going to see continued decline as you go through the year. We also had lower shared service costs in the second half of this year.

Speaker #3: Then in the first half of this year, as we kind of lap the increases that we saw last year, and we're starting to see some ramp down as it relates to transformation costs.

Speaker #3: Doesn't mean 're not investing in our business. There are still specific initiatives we're investing in, and labor is one of them. Labor, improving our labor utilization, improving the teammate experience has been a ority for us.

Speaker #3: And we lay out in the prepared remarks what we're thinking about there. One example of where we're seeing benefit of an overall system improvement with our labor approach.

Speaker #3: And some of it is system-based, meaning technology, and some of it is just improved process and workflow. But we had a net reduction in overall hires in the first quarter of about 1,500 people.

Speaker #3: And we had a net higher in the second quarter of 1,400. So it's almost a 3,000-person swing, if you will, from first quarter to second quarter.

Speaker #3: And part of that is driven by, ou ow, shorter time from application to hire. Better S&OP or sales and operations demand signals. So that we are hiring the appropriate amount of personnel for the work required.

Speaker #3: And then we track really closely what we call the application to hire funnel. And where we may have gaps ause along that path, you can you can lose potential teammates.

Speaker #3: And so we've been much more rigorous with our workforce operations team in tracking that funnel so that we have a higher percentage of folks that make it through it and then ultimately get onboarded into the company.

Speaker #3: So we feel really good about both the pilot that's been going on where we've sharing labor across geographies versus being banner-specific. But also just in the improvement in workflows within their workforce operations.

Speaker #6: If I can just add to that, Faiza. If we did get to a point to where throughout the quarter we improved on the hiring front, and I think we entered the second half in a good place, what I just want to note was that I think that manifests itself, especially in retailer segment where we have ter staffing levels there overall, which puts us in a good place to be le to take on some incremental project work, which can be very beneficial for us.

Speaker #6: And then also stronger execution and experiential. Not only in execution rate, but also the ability to handle more demos. We've seen really good demand signals there.

Speaker #6: That I think puts us in a good place to be le to accommodate those. And that should benefit our experiential segment in particular in the second half of the year.

Speaker #5: All right. Great. Thank you. And then just last one on cash flow rate. So you're king about slightly better cash flow conversion. Is that primarily coming from lower CapEx and, you ow, what is I know you mentioned timing of projects, but is this are we shifting CapEx into next year or just give us a bit more color around what's driving the lower CapEx this year?

Speaker #6: Yes. So obviously, we did take the CapEx down a little bit about $15 million at midpoint. And that would therefore be a little bit of a benefit to the cash flow.

Speaker #6: But the real benefits coming from, ou know, the improved DSO, which we saw at the beginnings of in this quarter, we'll see really kind take hold in Q3 and especially across Q4.

Speaker #6: And then also the lower restructuring costs year-over-year that's other big factor for the second half of year. So you've a stronger EBITDA kind of top to bottom, stronger EBITDA contributor, contribution.

Speaker #6: Less CapEx. Much ter working capital. Working capital then becomes a benefit to the company of working capital sourced in the half of the year.

Speaker #6: And then you'll see the lower restructuring costs as well. So all those things contribute to the better cash flow performance for the second half of the year.

Speaker #6: And I will say it's in line with what we ected. You know, we indicated last quarter, it's coming through as we expect. Yeah.

Speaker #5: Got it. Thank you very much. Yes.

Speaker #2: Thank you. Our next question is coming from Greg Parish with Morgan Stanley. Please proceed with your estion.

Speaker #7: Hey, thanks. Good morning and congrats on the result. I just want to pack branded EBITDA heading into the second half. I mean, I ink to hit the guide, we had to see some improvement there, right?

Speaker #7: You did that last year? I think in the quarter you said a third of the decline is client loss. So I guess backing that out, right, the other two-thirds, like maybe how does how does the other two-thirds improve in the second half?

Speaker #7: Maybe we just kind of unpack the drivers there and what should what we should expect. Thanks.

Speaker #3: Yeah. This is Dave. We see a few things, Greg. We see we talked about it a minute ago just, you know, wins in the business.

Speaker #3: Number one, we see you know a little bit of seasonality where you've got you ow orders you know which is how we're obviously paid through a commission-based business from a revenue standpoint.

Speaker #3: Increasing as you get into the back half of the year with things like holidays, especially the categories that most represent our lient base when you think of things like food and personal care.

Speaker #3: So those are two of the big drivers. We've also obviously been able to manage our cost to serve. We talked about our new pulse program, which we're ally excited about because it's giving us kind of greater fidelity in the decisioning that we have within the business because if you can think about a sales business, you're essing information to take action to improve an outcome.

Speaker #3: Effectively. And we're etting you know a faster signal as it relates to brand performance and especially those things that are kind of the root cause drivers to market share growth or decline.

Speaker #3: So 're able to capitalize on those more quickly. But it also because it's you ow leveraging expansive data and ytics in an automated way, it's also a little bit more efficient as well.

Speaker #3: So that combination puts us in a position to see some growth as we get into the second half.

Speaker #7: Great. Thanks. That's very helpful. And so sorry to come back to the CapEx point, but I mean, the 2 million was a little bit surprising.

Speaker #7: So I guess I mean, does that slow down like your completion of some of the technology investments that you're ing? I'm just trying to better stand here.

Speaker #6: Yeah. I think it looks. But honestly, there's been so it was lower than we expected in the quarter and truly a lot of it is timing.

Speaker #6: But we did bring the overall you know guidance down by $15 million at the midpoint. So there is less overall spending. And I would just say that we do expect the second half to be you know a heavier level of spend overall.

Speaker #6: Largely all IT projects are the main driver of our spend for the year. We have good visibility into those. And as I've said to you before, you know if we can push the timing out when we pay them, then we're going to take advantage of that.

Speaker #6: And there's been a little bit of that. We did also talk in the in the script about you know just underutilizing capitalizing labor or however I say that properly.

Speaker #6: we can capitalize labor at the proper rate, which ans it comes through more as OpEx than CapEx. And I think that's something we're working on you know very diligently and a lot of it comes down to planning and planning around our projects to make sure we're you know accomplishing those on time and starting those on time.

Speaker #6: If not, we can tend to see that bleed into OpEx. So there was an element of that as well. But with that said, I would say that you know maybe some of this shifted a into '26, but really at the end of the day, there's a more efficient you know delivery of the capital projects we expect for the year now.

Speaker #7: Okay. Thanks. That's helpful too. And then maybe just lastly for me, on the wage front, maybe just kind of update. I an, obviously, you've kind of reverted some of the headwinds you had in first quarter on labor availability, but then just on the wage front, just kind of mark us to market here on where we're at and what you're eing from the market in terms of wages.

Speaker #6: Yeah. We actually have seen pretty consistent wage inflation through the year. And about what we expected. You know, and that call it 3% range overall for the year.

Speaker #6: And we've been able to manage that quite well. I'd also say that in the quarter, our pricing nearly offset our labor inflation. It was very close.

Speaker #6: So I felt good about that progress we made on getting some price increases through to help offset what is obviously still some you ow higher labor costs are coming through in the economy today and in our .

Speaker #6: I think for the second half of the year, I'd expect that same consistency. We don't have a lot of incremental you know sort of regulatory-type changes that are occurring there.

Speaker #6: So I feel like we're in a etty good place to be able mostly offset that that the labor cost inflation with with pricing.

Speaker #7: Okay. Great. I'll pass it off. Thank you.

Speaker #2: Thank you. Our next question is coming from Joseph Beth with Canaccord Trinity. Please proceed with your question.

Speaker #8: Hey, guys. Will Johnson on here for Jeff. Thanks for taking my questions. So you can maybe drill down a bit on resolving that staffing shortfall in July.

Speaker #8: And anything you can share kind of about the demand signals there that are giving you confidence in those levels being more sustainable through the rest of the year.

Speaker #8: And then maybe if ou can drill down into retail services and how we should think about kind of that staffing uplift against maybe some more difficult Q3 comps and project from a project timing perspective.

Speaker #8: Thanks.

Speaker #3: Yeah. Thanks. So we don't have a net staffing shortfall in July. In fact, the trajectory of our kind of workforce operations and talent acquisition continues a pace.

Speaker #3: Even as we move into July, you ow when we talk about the project timing, it's literally just that. And we reference the fact that some of these projects, and this can happen on a year-over-year basis, that may have occurred in Q3, maybe shifting more into Q4.

Speaker #3: And which is why you'll see a little bit in the retailer segment, especially a part of that business, a little bit of you know shortfall in Q3 versus prior year.

Speaker #3: But a much better Q4. And we have visibility into that. On the demand signal front, we're seeing strong demand for demos and on the experiential space.

Speaker #3: And such that we're better able to meet that demand and hit higher el of execution rates because of the strength of our hiring and talent acquisition and overall retention plans.

Speaker #3: And then we feel very good about the S&OP process with our retailer group. And being able to kind of flex that force as needed based on project timing.

Speaker #3: And a lot of these projects occur in the third quarter and going into the early fourth. Obviously, as you get into holiday periods, you know retailers look to have fewer third, but less third-party labor in the stores, which is very common and normal and is in our normal seasonality.

Speaker #3: But in the retailer spaces, the one where just due to timing, you're going to have a little bit of less project work in the third quarter, but we know that gets kind of compensated for in the fourth quarter.

Speaker #7: Got it. Thanks.

Speaker #2: And there are no further questions. That is time. I want turn the call back over to Dave Peacock for closing comments.

Speaker #3: Thank you, Janice. We will be attending the Canaccord Growth Conference on August 12th, next week, in Boston with a webcast of a fireside chat at noon Eastern time.

Speaker #3: We hope to see you there. And again, thank you for joining us today.