# Advantage Solutions Inc. (ADV) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Advantage Solutions Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1776661/000095017025035151/adv-20241231.htm
Accession: 0000950170-25-035151
Filing date: 2025-03-07
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/ADV/
All MD&A years: /company/ADV/mda/
Previous year: /company/ADV/mda/fy2023/ (FY 2023)
Next year: /company/ADV/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 1, 2024.

Executive Overview

We are a leading business solutions provider to consumer goods manufacturers and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling and private brand development. We generate demand for brands and retailers of all sizes, helping get the right products on the shelf —whether physical or digital— and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.

Effective January 1, 2024, we revised our reportable segments to align our business strategy, and the manner in which the Chief Executive Officer, our chief operating decision maker, manages and assesses the performance and makes decisions regarding the allocation of resources for us. Our revised reportable segments consist of Branded Services, Experiential Services and Retailer Services.

We have reorganized our portfolio of businesses into a new, simplified structure that more closely aligns our business capabilities with economic buyers. As a result of this reorganization, we have formally disposed of certain business units. We have determined that the business units disposed of met the discontinued operations accounting criteria as their dispositions represent a strategic shift that has had a major effect on our operations and financial results. Refer to Note 2—Discontinued Operations, Deconsolidation of European Joint Venture, Divestitures and Acquisitions. We continue to evaluate opportunities to further simplify our operations so we can focus more resources on our core businesses.

Through our Branded Services segment, which generated approximately 36.6% and 45.1% of our revenues in the years ended December 31, 2024 and 2023, respectively, we provide services to branded consumer goods manufacturers through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Brokerage services is primarily an outsourced sales and services agency for branded consumer goods manufacturers at retailer headquarters, in-store and online. Additionally, we lead with insights to execute branded merchandising strategies for branded consumer goods manufacturers related to merchandising in-store and online to drive product sales. Our omni-commerce marketing services primarily relate to digital and field marketing services, including shopper marketing, targeted advertising, interactive design and development, inventory management, application development and content management solutions.

Through our Experiential Services segment, which generated approximately 36.3% and 29.7% of our revenues in the years ended December 31, 2024 and 2023, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations. We manage highly customized, large-scale sampling programs for leading brands and retailers. We also manage, organize and execute special events for brands and retailers, including large-scale meetings, mobile tours, summits and festivals.

Through our Retailer Services segment, which generated approximately 27.1% and 25.2% of our revenues in the years ended December 31, 2024 and 2023, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development, including coordination related to the sourcing, manufacturing, branding and distribution of private label products to the end retailer. Retailer merchandising services primarily relate to the execution of merchandising strategies, including traditional services such as interior store construction, store resets, category updates and new item implementation. Agency services primarily consist of providing marketing strategies within retail locations, including retail media networks, and analyzing shopper behavior to offer planning, execution and measurement of insight-based, retailer-specific promotions that target retailers’ specific shopper base to drive product sales.

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Summary

Our financial performance from continuing operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023 includes:

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Revenues decreased by $333.8 million, or 8.6%, to $3,566.3 million;

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Operating income decreased by $341.6 million to $295.0 million of operating loss;

•
Net loss increased by $297.2 million to $378.4 million;

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Adjusted Net Income decreased by $3.1 million, or 3.9%, to $75.7 million; and

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Adjusted EBITDA increased by $3.8 million, or 1.1%, to $356.0 million.

Factors Affecting Our Business and Financial Reporting

There are a number of factors, in addition to certain prior period balances related to our reportable segments and discontinued operations that have been reclassified to conform to the current presentation, that affect the performance of our business and the comparability of our results from period to period including:

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Organic Growth. Part of our strategy is to generate organic growth by expanding our existing client relationships, continuing to win new clients, pursuing channel expansion, enhancing our service offerings, digital technology solutions, developing our international platform, delivering operational efficiencies and expanding into logical adjacencies. We believe that by pursuing these organic growth opportunities we will be able to continue to enhance our value proposition to our clients and thereby grow our business.

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Acquisitions and Divestitures. We have grown our business in part by acquiring businesses, both domestic and international. Many of our acquisition agreements include contingent consideration arrangements, which are further described below. We have completed acquisitions at what we believe are attractive purchase prices and have regularly structured our agreements to result in the generation of long-lived tax assets, which have in turn reduced our effective purchase prices when incorporating the value of those tax assets. We continue to look for strategic acquisitions that can be completed at attractive purchase prices. We also continue to evaluate potential opportunities to refine our focus on our core business of converting shoppers into buyers for consumer goods companies and retailers, including divesting certain businesses. As part of the sales agreements for certain divestitures, we have agreed to provide certain transitional services as defined within the respective transition services agreements for a period of time after sale. We continue to evaluate opportunities to further simplify our operations so we can focus more resources on our core businesses.

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Contingent Consideration. Many of our acquisition agreements include contingent consideration arrangements, which are generally based on the achievement of financial performance thresholds by the operations attributable to the acquired businesses. The contingent consideration arrangements are based upon our valuations of the acquired businesses and are intended to share the investment risk with the sellers of such businesses if projected financial results are not achieved. The fair values of these contingent consideration arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, we estimate the fair value of contingent consideration payments as part of the initial purchase price. We review and assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from our initial estimates. Adjustments to the estimated fair value related to changes in unobservable inputs are reported in “Selling, general and administrative expenses” in our Consolidated Statements of Operations and Comprehensive Loss.

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Depreciation and Amortization. As a result of the acquisition of our business by Topco on July 25, 2014 (the “2014 Topco Acquisition”), we acquired significant intangible assets, the value of which is amortized, on a straight-line basis, over 15 years from the date of the 2014 Topco Acquisition, unless determined to be indefinite-lived. The amortization of such intangible assets recorded in our consolidated financial statements has a significant impact on our operating (loss) income and net loss. Our historical acquisitions have increased, and future acquisitions likely will increase, our intangible assets. We do not believe the amortization expense associated with the intangible assets created from our purchase accounting adjustments reflect a material economic cost to our business. Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense.

•
Impairment of Goodwill and Indefinite-Lived Asset. We recognized goodwill and intangible asset impairment charges of $233.2 million and $42.0 million, respectively, during the year ended December 31, 2024. We recognized an

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intangible asset impairment charge of $43.5 million related to our indefinite-lived trade name during the year ended December 31, 2023. We recognized goodwill impairment charges of $1,367.5 million for the year ended December 31, 2022. We recognized an intangible asset impairment charge of $205.0 million related to our indefinite-lived trade name during the year ended December 31, 2022. The impairment charges have been reflected in “Impairment of goodwill and indefinite-lived asset” in our Consolidated Statements of Operations and Comprehensive Loss.

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Foreign Exchange Fluctuations. Our financial results are affected by fluctuations in the exchange rate between the U.S. dollar and other currencies, primarily the Canadian dollar due to our operations in such foreign jurisdictions. See also “—Quantitative and Qualitative Disclosure of Market Risk—Foreign Currency Risk.”

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Seasonality. Our quarterly results are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters, as a result of higher consumer spending. We generally record slightly lower revenues in the first fiscal quarter of each year, as our clients begin to roll out new programs for the year, and consumer spending generally is less in the first fiscal quarter than other quarters. The timing of our clients’ marketing expenses, associated with marketing campaigns and new product launches, can also result in fluctuations from one quarter to another.

How We Assess the Performance of Our Business

Revenues

Revenues related to the Branded Services segment are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services.

Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where the Company manages highly customized, large-scale sampling programs for leading brands and retailers.

Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandising strategies and marketing strategies within retailer locations, including retail media networks and analyzing shopper behavior.

We analyze our financial performance, in part, by measuring revenue performance in two ways—revenue growth attributable to organic activities and revenue growth and declines attributable to acquisitions and divestitures, which we refer to as organic revenues and acquired revenues, respectively.

We define organic revenues as any revenues that are not acquired revenues. Our organic revenues exclude the impacts of acquisitions and divestitures, when applicable, which improves comparability of our results from period to period.

In general, when we acquire a business, the acquisition includes a contingent consideration arrangement (e.g., an earnout provision) and, accordingly, we separately track the financial performance of the acquired business. In such cases, we consider revenues generated by such a business during the 12 months following its acquisition to be acquired revenues. For example, if we completed an acquisition on September 30, 2023 for a business that included a contingent consideration arrangement, we would consider revenues from the acquired business from October 1, 2023 to September 30, 2024 to be acquired revenues. We generally consider growth attributable to the financial performance of an acquired business after the 12-month anniversary of the date of acquisition to be organic.

If an acquisition of an acquired business does not include a contingent consideration arrangement, or we otherwise do not separately track the financial performance of the acquired business due to operational integration, we consider the revenues that the business generated in the 12 months prior to its acquisition to be our acquired revenues for the 12 months following its acquisition, and any differences in revenues actually generated during the 12 months after its acquisition to be organic. For example, if we completed an acquisition on September 30, 2024 for a business that did not include a contingent consideration arrangement, we would consider the amount of revenues from the acquired business from October 1, 2023 to September 30, 2024 to be acquired revenues during the period from October 1, 2024 to September 30, 2025, with any differences from that amount actually generated during the latter period to be organic revenues.

All revenues generated by our acquired businesses are considered to be organic revenues after the 12-month anniversary of the date of acquisition.

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When we divest a business, unless otherwise presented as discontinued operations, we consider the revenues that the divested business generated in the 12 months prior to its divestiture to be subtracted from acquired revenues for the 12 months following its divestiture. For example, if we completed a divestiture on October 1, 2024 for a business, we would consider the amount of revenues from the divested business from October 1, 2023 to September 30, 2024 to be subtracted from organic revenues during the period from October 1, 2024 to September 30, 2025.

We measure organic revenue growth and acquired revenue growth by comparing the organic revenues or acquired revenues, respectively, period over period, net of any divestitures.

Cost of Revenues

Our cost of revenues consists of both fixed and variable expenses primarily attributable to the hiring, training, compensation and benefits provided to both full-time and part-time teammates, as well as other project-related expenses. A number of costs associated with our teammates are subject to external factors, including inflation, increases in market specific wages and minimum wage rates at federal, state and municipal levels and minimum pay levels for exempt roles. Additionally, when we enter into certain new client relationships, we may experience an initial increase in expenses associated with hiring, training and other items needed to launch the new relationship.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, payroll taxes and benefits for corporate personnel. Other overhead costs include information technology, professional services fees, including accounting and legal services, and other general corporate expenses. We also incur expenses operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and related professional services. Additionally, included in selling, general and administrative expenses are costs associated with the changes in fair value of the contingent consideration of acquisitions and other costs related to our internal reorganization activities, including our restructuring plan, acquisition and divestiture transactions. These transaction-related costs are comprised of fees related to change of equity ownership, professional fees, due diligence and integration or divestiture activities.

Impairment of Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an acquisition. We test for impairment of goodwill at the reporting unit level. We generally combine components that have similar economic characteristics, nature of services, types of clients, distribution methods and regulatory environment. Changes to our operating segments effective January 1, 2024, as described in Note 17—Operating Segments and Geographic Information, resulted in a change to our reporting units (Branded Services, Branded Agencies, Experiential Services, Merchandising and Retailer Agencies). As a result, the Company performed the required impairment assessments directly before and immediately after the change in reporting units as of January 1, 2024. The assets and liabilities were reassigned to the applicable reporting units and allocated goodwill using the relative fair value approach. The estimated fair values of the underlying reporting units were determined based on a combination of the income and market approaches. The income approach utilizes estimates of discounted cash flows for the underlying business, which requires assumptions for growth rates, EBITDA margins, terminal growth rate, discount rate, and incremental net working capital, all of which require significant management judgment. The market approach applies market multiples derived from historical earnings data of selected guideline publicly traded companies that are first screened by industry group and then further narrowed on the reporting units' business descriptions, markets served, competitors, EBITDA margins and revenue size. We compared a weighted average of the output from the income and market approaches to compute the fair value of the reporting units. The assumptions in the income and market approach are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. We based our fair value estimates on assumptions we believe to be reasonable but which are unpredictable and inherently uncertain. A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future. Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

Other (Income) Expenses

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents a non-cash (income) expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants. Based on the availability of sufficient observable information, we

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determine the fair value of the liability classified private placement warrants by approximating the value with the price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.

Interest Expense

Interest expense relates primarily to borrowings under our material debt agreements as described below. See “ —Liquidity and Capital Resources.”

Depreciation and Amortization

Amortization Expense

As a result of the 2014 Topco Acquisition, we acquired significant intangible assets, the value of which is amortized, on a straight-line basis, over 15 years from the date of the 2014 Topco Acquisition, unless determined to be indefinite-lived. Included in our depreciation and amortization expense is amortization of acquired intangible assets. We have ascribed value to identifiable intangible assets other than goodwill in our purchase price allocations for companies we have acquired. These assets include, but are not limited to, client relationships and trade names. To the extent we ascribe value to identifiable intangible assets that have finite lives, we amortize those values over the estimated useful lives of the assets. Such amortization expense, although non-cash in the period expensed, directly impacts our results of operations. It is difficult to predict with any precision the amount of expense we may record relating to future acquired intangible assets.

Depreciation Expense

Depreciation expense relates to the property and equipment that we own, which represented less than 1% of our total assets at December 31, 2024 and 2023.

Income Taxes

Income tax expense and our effective tax rates can be affected by many factors, including state apportionment factors, our acquisition and divestiture strategy, tax incentives and credits available to us, changes in judgment regarding our ability to realize our deferred tax assets, changes in our worldwide mix of pre-tax losses or earnings, changes in existing tax laws and our assessment of uncertain tax positions.

Cash Flows

We have positive cash flow characteristics, as described below, due to the limited required capital investment in the fixed assets and working capital needs to operate our business in the normal course. See “ —Liquidity and Capital Resources.”

Our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility (as defined below), divestitures and other debt. Our principal uses of cash are operating expenses, working capital requirements, investments in our technology platforms, acquisitions, repayment of debt and share repurchases.

During the year ended December 31, 2024, we sold five businesses. We expect to use the divestiture proceeds to invest in our business, reduce debt, create financial flexibility for opportunistic share repurchases or potential future acquisitions.

Adjusted Net Income

Adjusted Net Income is a non-GAAP financial measure. Adjusted Net Income means net loss from continuing operations before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived asset, (iii) gain on deconsolidation of subsidiaries, (iv) equity-based compensation of Karman Topco L.P., (v) changes in fair value of warrant liability, (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses, (xi) amortization of intangible assets, (xii) costs associated with COVID-19, net of benefits received, (xiii) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xiv) costs associated with (recovery from) the Take 5 Matter, (xv) other adjustments that management believes are helpful in evaluating our operating performance, and (xvi) related tax adjustments.

We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period. Adjusted

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Net Income should not be considered as an alternative for Net loss from continuing operations, our most directly comparable measure presented on a GAAP basis.

Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment

Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment are supplemental non-GAAP financial measures of our operating performance.

Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations means net income before (i) interest expense (net), (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill, (vi) changes in fair value of warrant liability, (vii) stock-based compensation expense, (viii) equity-based compensation of Karman Topco L.P., (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition and divestiture related expenses, (xi) (gain) loss on divestitures, (xii) restructuring expenses, (xiii) reorganization expenses, (xiv) litigation expenses (recovery), (xv) costs associated with COVID-19, net of benefits received, (xvi) costs associated with (recovery from) the Take 5 Matter, (xvii) EBITDA for economic interests in investments and (xviii) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA by Segment means, with respect to each segment, operating (loss) income from continuing operations before (i) depreciation, (ii) amortization of intangible assets, (iii) impairment of goodwill, (iv) stock based compensation expense, (v) equity-based compensation of Karman Topco L.P., (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses (recovery), (xi) costs associated with COVID-19, net of benefits received, (xii) costs associated with (recovery from) the Take 5 Matter, (xiii) EBITDA for economic interests in investments and (xiv) other adjustments that management believes are helpful in evaluating our operating performance, in each case, attributable to such segment.

We present Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance. These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations. None of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations nor Adjusted EBITDA by Segment should be considered as an alternative for Net loss or operating (loss) income, our most directly comparable measures presented on a GAAP basis. Non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore our non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

For a reconciliation of Adjusted EBITDA to net loss and Adjusted EBITDA by segment to operating (loss) income from continuing operations, see “ —Non-GAAP Financial Measures.”

Transformation Strategy

In July 2024, we announced a restructuring plan as part of our transformation strategy to improve our cost structure and to implement various other efforts to improve operating efficiency. The restructuring plan was designed to simplify the organization that supports the new segments after the divestitures and related transitions as well as to generate operational efficiencies during a time of market challenges affecting our clients. The overall project was substantially completed at the end of fiscal year 2024.

Reorganization expenses

Beginning in the first quarter of fiscal year 2023, we engaged third-party professional service consultants to assist in identifying and implementing operational efficiencies and cost-saving strategies. These efforts focused on internal process optimization and workforce alignment to our cost structure with current business needs. During the year ended December 31, 2024, we incurred $88.8 million in reorganization expenses related to various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs, compared to $56.1 million during the year ended December 31, 2023. These amounts were recognized in “Selling, general, and administrative expenses” in the Consolidated Statements of Operations and

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Comprehensive Loss. The reorganization plan was designed to simplify the organization that supports the new segments after the divestitures and related transitions.

Restructuring expenses

In the third quarter of fiscal year 2024, we implemented restructuring plans as a result of the overall reorganization.

During the third quarter of fiscal year 2024, we offered a Voluntary Early Retirement Program (“VERP”) to certain eligible U.S.-based employees. During the year ended December 31, 2024, we recorded $9.9 million of settlement charges and special termination benefits in “Selling, general, and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Loss.

In connection with our reorganization initiatives, in September 2024, we announced a cost savings program to improve operational performance and align cost structures consistent with revenue levels associated with business changes, which includes special termination benefits associated with a reduction-in-force (“2024 RIF”) and other optimization initiatives. During the year ended December 31, 2024, we recorded $20.1 million of settlement charges and special termination benefits in “Selling, general, and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Loss.

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Results of Operations for the Years Ended December 31, 2024 and 2023

The following table sets forth items derived from the Company’s consolidated statements of operations for the years ended December 31, 2024 and 2023 in dollars and as a percentage of total revenues.

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(1)
Adjusted Net Income and Adjusted EBITDA from continuing operations are financial measures that are not calculated in accordance with GAAP. For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA from continuing operations and reconciliations of net loss to Adjusted Net Income and Adjusted EBITDA, see “—Non-GAAP Financial Measures.”

Comparison of the Years Ended December 31, 2024 and 2023

Revenues

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Total revenues decreased by $333.8 million, or 8.6%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023. Excluding $374.4 million revenues during the year ended December 31, 2023 prior to the deconsolidation of our European joint venture, revenues increased 1%.

The Branded Services segment revenues decreased $452.1 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023. Excluding $374.4 million revenues during the year ended December 31, 2023 prior to the

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deconsolidation of our European joint venture, the segment experienced a decrease of $77.7 million in revenues primarily due to an intentional client resignation and a weaker economic environment for our consumer package goods clients.

The Experiential Services segment revenues increased $135.6 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023. The increase in revenues was primarily due to an increase in our events per day volume.

The Retailer Services segment revenues decreased $17.3 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023. The decrease in revenues was primarily due to reductions in the scope of services from our retailer clients as retailers respond to challenges in the broader markets in which they operate including increased commodity prices and wages.

Cost of Revenues

Cost of revenues as a percentage of revenues for the year ended December 31, 2024 was 85.8%, as compared to 87.6% for the year ended December 31, 2023. The decrease as a percentage of revenues was largely attributable to the change in the revenue mix of our services primarily related to the deconsolidation of our European joint venture, one time litigation expense in the prior year with recovery in the current year and decreased incentive compensation expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of revenues for the year ended December 31, 2024 was 9.1%, as compared to 6.4% for the year ended December 31, 2023. The increase as a percentage of revenues was primarily due to a $62.7 million increase in costs associated with our internal reorganization activities, largely related to professional fees, voluntary early retirement benefits and severance and the continued investment in our support services including our technology solutions.

Impairment of Goodwill and Indefinite-lived Asset

During the second quarter of fiscal year 2024, we determined a triggering event occurred and an impairment assessment was warranted for the Branded Agencies reporting unit goodwill due to the pending sale of one of the businesses that comprised a substantial portion of the assets, liabilities and prospective cash flows of the Branded Agencies reporting unit. As a result of the impairment test performed, we recognized a goodwill impairment charge of $99.7 million related to our Branded Agencies reporting unit goodwill during the year ended December 31, 2024, which has been reflected in “Impairment of goodwill and indefinite-lived asset” in the Consolidated Statements of Operations and Comprehensive Loss. As a result of this charge, an immaterial amount of goodwill remains in this reporting unit.

During the fourth quarter of fiscal year 2024, we identified a triggering event that required an impairment assessment of goodwill for the Branded Services reporting unit. The triggering event was due to the loss of clients and a reduction in the scope of client services as our clients implemented internal cost reduction initiatives in response to challenges in the broader markets in which they operate. As a result of the goodwill impairment test, we recognized a goodwill impairment charge of $133.5 million related to the Branded Services reporting unit during the year ended December 31, 2024. This charge is reflected in “Impairment of goodwill and indefinite-lived assets” in the Consolidated Statements of Operations and Comprehensive Loss.

During the fourth quarter of December 31, 2024, we recognized an intangible asset impairment charge of $42.0 million as a result of the triggering event for the Branded Services reporting unit.

We recognized a $43.5 million trade name intangible asset impairment charge during the year ended December 31, 2023 due to the deconsolidation of our European joint venture and intended sale of the foodservice businesses.

Depreciation and Amortization Expense

Depreciation and amortization expense was $204.6 million for the year ended December 31, 2024 as compared to $208.9 for the year ended December 31, 2023, which was primarily due to a decrease in software amortization expenses and intangible assets amortization expense.

39

Income from Equity Method Investments

Income from equity method investments decreased by $3.1 million for the year ended December 31, 2024 due to the net income attributable from our investments in unconsolidated affiliates. For additional information see Item 8. Financial Statements and Supplementary Data — Note 11—Investments in Unconsolidated Affiliates.

Operating (Loss) Income from Continuing Operations

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,","","","Change"],["(amounts in thousands)","","2024","","","2023","","","$","","","%"],["Branded Services","","$","(318,573",")","","$","27,193","","","$","(345,766",")","","","(1,271.5",")%"],["Experiential Services","","","255","","","","3,295","","","","(3,040",")","","","(92.3",")%"],["Retailer Services","","","23,335","","","","16,101","","","","7,234","","","","44.9","%"],["Total operating (loss) income from continuing operations","","$","(294,983",")","","$","46,589","","","$","(341,572",")","","","(733.2",")%"]]
[[/GREPCENT_TABLE]]

In the Branded Services segment, the decrease in operating income to an operating loss for the year ended December 31, 2024 was primarily due to the goodwill impairments and the decrease in revenue noted above and an increase in costs associated with our internal reorganization activities combined with continued investment in our support services, including our technology solutions.

In the Experiential Services segment, the decrease in operating income for the year ended December 31, 2024 was due to an increase in costs associated with our internal reorganization activities combined with continued investment in our support services, including our technology solutions, partially offset by the increase in revenues as described above.

In the Retailer Services segment, the increase in operating income year ended December 31, 2024 was due to improved margins in our services partially offset by an increase in costs associated with our internal reorganization activities and continued investment in our support services, including our technology solutions.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents $0.6 million and $0.3 million of non-cash income resulting from fair value adjustments to the warrant liability for the private placement warrants for the years ended December 31, 2024 and 2023, respectively.

Interest Expense, Net

Interest expense, net decreased $18.9 million, or 11.4%, to $146.8 million for the year ended December 31, 2024, from $165.7 million for the year ended December 31, 2023. The decrease in interest expense, net was primarily due to lower debt balances as a result of repurchases of Term Loan Facility and Senior Secured Notes as further described in “Liquidity and Capital Resources—Description of Credit Facilities—Senior Secured Notes”, partially offset by changes in the fair value of our derivative instruments during the year ended December 31, 2024.

Benefit from Income Taxes from Continuing Operations

Benefit from income taxes was $62.8 million for the year ended December 31, 2024 as compared to a benefit from income taxes of $37.6 million for the year ended December 31, 2023. The fluctuation was primarily attributable to a larger pre-tax loss during the year ended December 31, 2024 compared to a smaller pre-tax loss during the year ended December 31, 2023. Also contributing to the variance was the goodwill impairments during the year ended December 31, 2024 and the deconsolidation of our European joint venture during the year ended December 31, 2023.

The provision for income taxes from discontinued operations was $41.3 million for the year ended December 31, 2024, while the provision for income taxes from discontinued operations was $8.6 million for the year ended December 31, 2023. Income tax expense for the year ended December 31, 2024 and 2023 was impacted primarily by the result of pre-tax income from discontinued operations and divested entities.

Net Loss from Continuing Operations

Net loss from continuing operations was $378.4 million for the year ended December 31, 2024, compared to net loss from continuing operations of $81.2 million for the year ended December 31, 2023. The increase in net loss from continuing operations was primarily driven by goodwill and intangible asset impairment charges of $275.2 million during the year ended December 31, 2024, a

40

$62.7 million increase in costs associated with our internal reorganization and restructuring activities, largely related to professional fees and severance, partially offset by an $18.9 million decrease in interest expense and a $25.1 million increase in the benefit from income taxes.

Net Income from Discontinued Operations

Net income from discontinued operations was $53.6 million for the year ended December 31, 2024, compared to net income from discontinued operations of $20.8 million for the year ended December 31, 2023.

Adjusted Net Income

The decrease in Adjusted Net Income for the year ended December 31, 2024 was attributable to the increase in Adjusted EBITDA as described below coupled with the decrease in interest expense. For a reconciliation of Adjusted Net Income to Net loss from continuing operations, see “ —Non-GAAP Financial Measures”.

Adjusted EBITDA from Continuing Operations and Adjusted EBITDA by Segment

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,","","","Change"],["(amounts in thousands)","","2024","","","2023","","","$","","","%"],["Branded Services","","$","181,465","","","$","203,683","","","$","(22,218",")","","","(10.9",")%"],["Experiential Services","","","75,697","","","","53,003","","","","22,694","","","","42.8","%"],["Retailer Services","","","98,852","","","","95,562","","","","3,290","","","","3.4","%"],["Total Adjusted EBITDA from Continuing Operations","","$","356,014","","","$","352,248","","","$","3,766","","","","1.1","%"]]
[[/GREPCENT_TABLE]]

Adjusted EBITDA from Continuing Operations was $356.0 million for the year ended December 31, 2024, compared to $352.2 million for the year ended December 31, 2023. The increase in Adjusted EBITDA was primarily attributable to an increase in the Experiential Services segment. In the Branded Services segment, the decrease was primarily attributable to the decline in revenues partially offset by the decline in cost of revenues as described above. In the Experiential Services segment, the increase was driven largely by the growth in revenues from the in-store sampling and demonstration services offset by continued investment in our support services including our technology solutions. In the Retailer Services segment, the increase was primarily attributable to increase in margins driven by price discipline. For a reconciliation of Adjusted EBITDA from Continuing Operations to Net loss from continuing operations, see “—Non-GAAP Financial Measures.”

Non-GAAP Financial Measures

Adjusted Net Income is a non-GAAP financial measure. Adjusted Net Income means net loss from continuing operations before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived asset, (iii) gain on deconsolidation of subsidiaries, (iv) equity-based compensation of Karman Topco L.P., (v) changes in fair value of warrant liability, (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses, (xi) amortization of intangible assets, (xii) costs associated with COVID-19, net of benefits received, (xiii) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xiv) costs associated with (recovery from) the Take 5 Matter, (xv) other adjustments that management believes are helpful in evaluating our operating performance, and (xvi) related tax adjustments.

We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period. Adjusted Net Income should not be considered as an alternative for our net loss from continuing operations, our most directly comparable measure presented on a GAAP basis.

41

Adjusted Net Income from Continuing Operations

A reconciliation of Adjusted Net Income from Continuing Operations to Net loss is provided in the following table:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["(in thousands)","","2024","","","","2023","","","2022"],["Net loss from continuing operations","","$","(378,404",")","","","$","(81,211",")","","$","(1,418,652",")"],["Less: net income attributable to noncontrolling interests","","","\u2014","","","","","2,346","","","","3,757"],["Add:"],["Impairment of goodwill and indefinite-lived asset","","","275,170","","","","","43,500","","","","1,572,523"],["Gain on deconsolidation of subsidiaries","","","\u2014","","","","","(58,891",")","","","\u2014"],["Equity-based compensation of Karman Topco L.P. (a)","","","723","","","","","(2,524",")","","","(6,934",")"],["Changes in fair value of warrant liability","","","(584",")","","","","(286",")","","","(21,236",")"],["Fair value adjustments related to contingent consideration related to acquisitions (b)","","","1,678","","","","","11,152","","","","6,572"],["Acquisition and divestiture related expenses (c)","","","(1,168",")","","","","3,206","","","","18,950"],["Restructuring expenses (d)","","","30,051","","","","","\u2014","","","","\u2014"],["Reorganization expenses (e)","","","88,800","","","","","56,133","","","","5,970"],["Litigation expenses (recovery) (f)","","","(1,940",")","","","","9,519","","","","5,357"],["Loss of disposal of assets","","","\u2014","","","","","\u2014","","","","2,863"],["Amortization of intangible assets (g)","","","177,296","","","","","186,827","","","","189,064"],["Costs associated with COVID-19, net of benefits received (h)","","","\u2014","","","","","3,283","","","","7,208"],["Gain on repurchases of Term Loan Facility and Senior Secured Notes debt (i)","","","(7,091",")","","","","(8,665",")","","","\u2014"],["Costs associated with the Take 5 Matter, net of (recoveries) (j)","","","1,845","","","","","(1,380",")","","","2,465"],["Tax adjustments related to non-GAAP adjustments (k)","","","(110,664",")","","","","(79,519",")","","","(204,770",")"],["Adjusted Net Income from Continuing Operations","","$","75,712","","","","$","78,798","","","$","155,623"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(a)","Represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors and (ii) equity-based compensation expense associated with the Common Series C Units of Topco."],["(b)","Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods."],["(c)","Represents fees and costs associated with activities related to our acquisitions, divestitures, and related activities, including professional fees, due diligence, and integration activities."],["(d)","Restructuring charges including programs designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes. Restructuring expenses include costs associated with the VERP and special termination benefits associated with the 2024 RIF and other optimization initiatives."],["(e)","Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs."],["(f)","Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities."],["(g)","Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions."],["(h)","Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line teammates, medical benefit payments for furloughed teammates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief."],["(i)","Represents gains associated with the repurchases of Term Loan Facility and Senior Secured Notes, net of deferred financing fees related to repricing of Term Loan Facility. For additional information, refer to Note 8\u2014Debt to our consolidated financial statements for the years ended December 31, 2024 and 2023."],["(j)","Represents cash receipts from an insurance policy for claims related to the Take 5 Matter and costs associated with investigation and remediation activities related to the Take 5 Matter, primarily professional fees and other related costs."],["(k)","Represents the tax benefit associated with the adjustments above, taking into account the Company\u2019s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact."]]
[[/GREPCENT_TABLE]]

Adjusted EBITDA

Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment are supplemental non-GAAP financial measures of our operating performance. Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations mean net loss from continuing operations before (i) interest expense (net), (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill, (vi) changes in fair value of warrant liability, (vii) stock-based compensation expense, (viii) equity-based compensation of Karman Topco L.P., (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition and divestiture related expenses, (xi) (gain) loss on divestitures, (xii) restructuring expenses, (xiii) reorganization expenses, (xiv) litigation expenses (recovery), (xv) costs associated with COVID-19, net of benefits received, (xvi) costs associated with (recovery from) the Take 5 Matter, (xvii) EBITDA for economic interests in investments and (xviii) other adjustments that management believes are helpful in evaluating our operating performance.

42

Adjusted EBITDA by Segment means, with respect to each segment, operating income (loss) from continuing operations before (i) depreciation, (ii) amortization of intangible assets, (iii) impairment of goodwill, (iv) stock-based compensation expense, (v) equity-based compensation of Karman Topco L.P., (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses (recovery), (xi) costs associated with COVID-19, net of benefits received, (xii) costs associated with (recovery from) the Take 5 Matter, (xiii) EBITDA for economic interests in investments and (xiv) other adjustments that management believes are helpful in evaluating our operating performance, in each case, attributable to such segment.

Unallocated shared costs associated with discontinued operations from certain shared administrative functions, through the close of the discontinued operations; excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Subsequent to the close of the divestitures, amounts attributable to unallocated shared costs would be mitigated through income from transition services agreements, subsequent strategic or restructuring initiatives, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations. See Note 2—Discontinued Operations, Deconsolidation of European Joint Venture, Divestitures and Acquisitions in Notes to the Consolidated Financial Statements, included elsewhere in this Annual Report for further details.

We present Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance. These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations. None of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations nor Adjusted EBITDA by Segment should be considered as an alternative for our Net income from discontinued operations, our most directly comparable measure presented on a GAAP basis. Non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore our non-GAAP measures may not be directly comparable to similarly titled measures of other companies.

43

Reconciliation of Adjusted EBITDA from Continuing Operations to Net loss from continuing operations is provided in the following table:

[[GREPCENT_TABLE]]
[["Continuing Operations","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Net loss from continuing operations","","$","(378,404",")","","$","(81,211",")","","","(1,418,652",")"],["Add:"],["Interest expense, net","","","146,792","","","","165,734","","","","104,387"],["Benefit from income taxes from continuing operations","","","(62,787",")","","","(37,648",")","","","(158,442",")"],["Depreciation and amortization","","","204,553","","","","208,856","","","","216,046"],["Impairment of goodwill and indefinite-lived asset","","","275,170","","","","43,500","","","","1,572,523"],["Gain on deconsolidation of subsidiaries","","","\u2014","","","","(58,891",")","","","\u2014"],["Loss on divestitures","","","\u2014","","","","\u2014","","","","2,863"],["Changes in fair value of warrant liability","","","(584",")","","","(286",")","","","(21,236",")"],["Stock-based compensation expense (a)","","","31,019","","","","38,933","","","","35,101"],["Equity-based compensation of Karman Topco L.P. (b)","","","723","","","","(2,524",")","","","(6,934",")"],["Fair value adjustments related to contingent consideration related to acquisitions (c)","","","1,678","","","","11,152","","","","6,572"],["Acquisition and divestiture related expenses (d)","","","(1,168",")","","","3,206","","","","18,950"],["Restructuring expenses (e)","","","30,051","","","","\u2014","","","","\u2014"],["Reorganization expenses (f)","","","88,800","","","","56,133","","","","5,971"],["Litigation (recovery) expenses (g)","","","(1,940",")","","","9,519","","","","5,357"],["Costs associated with COVID-19, net of benefits received (h)","","","\u2014","","","","3,283","","","","7,208"],["Costs associated with the Take 5 Matter, net of (recoveries) (i)","","","1,845","","","","(1,380",")","","","2,465"],["EBITDA for economic interests in investments (j)","","","20,266","","","","(6,128",")","","","(13,686",")"],["Adjusted EBITDA from Continuing Operations","","$","356,014","","","$","352,248","","","$","358,493"]]
[[/GREPCENT_TABLE]]

Reconciliations of Adjusted EBITDA from Discontinued Operations to Net income from discontinued operations is provided in the following table:

[[GREPCENT_TABLE]]
[["Discontinued Operations","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Net income from discontinued operations, net of tax","","$","53,634","","","$","20,829","","","$","41,350"],["Add:"],["Interest expense, net","","","48","","","","68","","","","72"],["Provision for income taxes from discontinued operations","","","41,318","","","","8,639","","","","13,104"],["Depreciation and amortization","","","4,695","","","","15,841","","","","17,029"],["(Gain) loss on divestitures (k)","","","(95,099",")","","","19,068","","","","\u2014"],["Stock-based compensation expense (a)","","","(2,808",")","","","3,947","","","","4,724"],["Fair value adjustments related to contingent consideration related to acquisitions (c)","","","1,883","","","","(790",")","","","(1,798",")"],["Acquisition and divestiture related expenses (d)","","","5,537","","","","3,818","","","","2,089"],["Reorganization expenses (f)","","","9,535","","","","888","","","","124"],["EBITDA for economic interests in investments (j)","","","(384",")","","","(274",")","","","798"],["Adjusted EBITDA from Discontinued Operations","","$","18,359","","","$","72,034","","","$","77,492"]]
[[/GREPCENT_TABLE]]

44

Financial information by segment, including a reconciliation of Adjusted EBITDA by Segment to operating (loss) income is provided in the following table:

[[GREPCENT_TABLE]]
[["Branded Services segment","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Operating (loss) income","","$","(318,573",")","","$","27,193","","","","(757,258",")"],["Add:"],["Depreciation and amortization","","","130,212","","","","140,932","","","","144,354"],["Impairment of goodwill and indefinite-lived asset","","","275,170","","","","43,500","","","","831,008"],["Gain on deconsolidation of subsidiaries","","","\u2014","","","","(58,891",")","","","\u2014"],["Loss on divestitures","","","\u2014","","","","\u2014","","","","2,863"],["Stock-based compensation expense (a)","","","12,391","","","","15,651","","","","10,120"],["Equity-based compensation of Karman Topco L.P. (b)","","","2,445","","","","(687",")","","","(2,650",")"],["Fair value adjustments related to contingent consideration related to acquisitions (c)","","","1,678","","","","11,136","","","","6,572"],["Acquisition and divestiture related expenses (d)","","","168","","","","1,777","","","","8,167"],["Restructuring expenses (e)","","","19,343","","","","\u2014","","","","\u2014"],["Reorganization expenses (f)","","","35,910","","","","28,739","","","","3,434"],["Litigation expenses (g)","","","610","","","","2,181","","","","\u2014"],["Costs associated with COVID-19, net of benefits received (h)","","","\u2014","","","","(323",")","","","2,600"],["Costs associated with the Take 5 Matter, net of (recoveries) (i)","","","1,845","","","","(1,380",")","","","2,465"],["EBITDA for economic interests in investments (j)","","","20,266","","","","(6,145",")","","","(13,663",")"],["Branded Services segment Adjusted EBITDA","","$","181,465","","","$","203,683","","","$","238,012"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Experiential Services segment","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Operating income (loss)","","$","255","","","$","3,295","","","","(371,900",")"],["Add:"],["Depreciation and amortization","","","41,728","","","","36,584","","","","37,906"],["Impairment of goodwill and indefinite-lived asset","","","\u2014","","","","\u2014","","","","354,452"],["Stock-based compensation expense (a)","","","7,761","","","","(3,420",")","","","(1,342",")"],["Equity-based compensation of Karman Topco L.P. (b)","","","(825",")","","","(805",")","","","(1,698",")"],["Fair value adjustments related to contingent consideration related to acquisitions (c)","","","\u2014","","","","7","","","","\u2014"],["Acquisition and divestiture related expenses (d)","","","47","","","","512","","","","3,357"],["Restructuring expenses (e)","","","4,368","","","","\u2014","","","","\u2014"],["Reorganization expenses (f)","","","21,757","","","","12,099","","","","1,506"],["Litigation expenses (recoveries) (g)","","","606","","","","1,842","","","","(700",")"],["Costs associated with COVID-19, net of benefits received (h)","","","\u2014","","","","2,889","","","","3,968"],["Experiential Services segment Adjusted EBITDA","","$","75,697","","","$","53,003","","","$","25,549"]]
[[/GREPCENT_TABLE]]

45

[[GREPCENT_TABLE]]
[["Retailer Services segment","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Operating (loss) income","","$","23,335","","","$","16,101","","","","(364,785",")"],["Add:"],["Depreciation and amortization","","","32,613","","","","31,340","","","","33,786"],["Impairment of goodwill and indefinite-lived asset","","","\u2014","","","","\u2014","","","","387,063"],["Stock-based compensation expense (a)","","","10,867","","","","26,702","","","","26,323"],["Equity-based compensation of Karman Topco L.P. (b)","","","(897",")","","","(1,032",")","","","(2,586",")"],["Fair value adjustments related to contingent consideration related to acquisitions (c)","","","\u2014","","","","9","","","","\u2014"],["Acquisition and divestiture related expenses (d)","","","(1,383",")","","","917","","","","7,426"],["Restructuring expenses (e)","","","6,340","","","","\u2014","","","","\u2014"],["Reorganization expenses (f)","","","31,133","","","","15,295","","","","1,031"],["Litigation (recovery) expenses (g)","","","(3,156",")","","","5,496","","","","6,057"],["Costs associated with COVID-19, net of benefits received (h)","","","\u2014","","","","717","","","","640"],["EBITDA for economic interests in investments (j)","","","\u2014","","","","17","","","","(23",")"],["Retailer Services segment Adjusted EBITDA","","$","98,852","","","$","95,562","","","$","94,932"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(a)","Represents non-cash compensation expense related to performance stock units, restricted stock units, and stock options under the 2020 Advantage Solutions Incentive Award Plan and the Advantage Solutions 2020 Employee Stock Purchase Plan."],["(b)","Represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors and (ii) equity-based compensation expense associated with the Common Series C Units of Topco."],["(c)","Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods."],["(d)","Represents fees and costs associated with activities related to our acquisitions, divestitures, and related reorganization activities, including professional fees, due diligence, and integration activities."],["(e)","Restructuring charges including programs designed to integrate and reduce costs intended to further improve efficiencies in operational activities and align cost structures consistent with revenue levels associated with business changes. Restructuring expenses include costs associated with the VERP and special termination benefits associated with the 2024 RIF and other optimization initiatives."],["(f)","Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs."],["(g)","Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities."],["(h)","Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line teammates, medical benefit payments for furloughed teammates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief."],["(i)","Represents cash receipts from an insurance policy for claims related to the Take 5 Matter and costs associated with investigation and remediation activities related to the Take 5 Matter, primarily professional fees and other related costs."],["(j)","Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements."],["(k)","Represents gains and losses on disposal of assets related to divestitures and losses on sale of businesses and assets held for sale, less cost to sell."]]
[[/GREPCENT_TABLE]]

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility, and other debt. Our principal uses of cash are operating expenses, working capital requirements, acquisitions, interest on debt, repayment of debt and share repurchases. Principal uses of cash used in investing activities includes our enterprise resource planning initiative, which includes upgrading our information system platform.

Share Repurchase Program

On November 9, 2021, we announced that our board of directors authorized the 2021 Share Repurchase Program pursuant to which we may repurchase up to $100.0 million of our Class A common stock.

The 2021 Share Repurchase Program does not have an expiration date but provides for suspension or discontinuation at any time. The 2021 Share Repurchase Program permits the repurchase of our Class A common stock on the open market and in other means from time to time. The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and we are under no obligation to repurchase any specific number of shares.

During the year ended December 31, 2024, we executed open market purchases of $34.1 million of our Class A common stock under the 2021 Share Repurchase Program. As of December 31, 2024, there remained $47.1 million of share repurchase availability under the 2021 Share Repurchase Program. In December 2023, we entered into a trading plan under Rule 10b5-1 of the Exchange Act

46

authorizing the repurchase of shares of the Company’s Class A common stock. From January 2, 2024 to April 24, 2024, we purchased 4.8 million shares of our Class A common stock. In June 2024, we entered into another trading plan under Rule 10b5-1 of the Exchange Act authorizing the repurchase of shares of the Company’s Class A common stock. From June 26, 2024 to August 13, 2024, we purchased 4.0 million shares of our Class A common stock.

We anticipate that our cash from operations, together with our current borrowing capacity, will be sufficient to fund purchases of our Class A common stock pursuant to the 2021 Share Repurchase Program and pay principal and interest as it comes due under our debt arrangements.

Cash Flows

A summary of cash provided by or used in our operating, investing and financing activities from continuing operations are shown in the following table:

[[GREPCENT_TABLE]]
[["","","Year Ended December 31,"],["(in thousands)","","2024","","","2023","","","2022"],["Net cash provided by operating activities","","$","93,095","","","$","228,492","","","$","104,705"],["Net cash provided by (used in) investing activities","","","206,446","","","","(50,515",")","","","(106,100",")"],["Net cash used in financing activities","","","(211,417",")","","","(178,396",")","","","(31,381",")"],["Net effect of foreign currency changes on cash, cash equivalents and restricted cash","","","(4,575",")","","","1,800","","","","(7,872",")"],["Net change in cash, cash equivalents and restricted cash","","$","83,549","","","$","1,381","","","$","(40,648",")"]]
[[/GREPCENT_TABLE]]

Net Cash Provided by Operating Activities

Net cash provided by operating activities from continuing operations for the year ended December 31, 2024 consisted of net loss from continuing operations of $378.4 million adjusted for certain non-cash items, including impairment of goodwill and indefinite-lived asset of $275.2 million, gain on repurchases of Senior Secured Notes and Term Loan Facility, net of cost of extinguishments of $9.1 million, depreciation and amortization of $204.6 million, stock-based compensation of $31.0 million and effects of changes in working capital.

Net cash provided by operating activities from continuing operations during the year ended December 31, 2023, consisted of net loss of $81.2 million adjusted for certain non-cash items, including depreciation and amortization of $208.9 million, impairment charges of $43.5 million, gain on deconsolidation of subsidiaries of $58.9 million, stock-based compensation of $38.9 million, fair value adjustments related to contingent consideration of $11.2 million, gain on repurchases of Term Loan Facility and Senior Secured Notes debt of $8.7 million and effects of changes in working capital.

Net cash provided by operating activities from discontinued operations during the year ended December 31, 2024, consisted of net income of $53.7 million adjusted for certain non-cash items, including gain on divestitures of $95.3 million and effects of changes in working capital.

Net cash provided by operating activities from discontinued operations during the year ended December 31, 2023, consisted of net income of $20.9 million adjusted for certain non-cash items, including depreciation and amortization of $15.8 million, loss on divestitures of $19.1 million and effects of changes in working capital.

Net Cash Used in Investing Activities

Net cash provided by investing activities from continuing operations for the year ended December 31, 2024 primarily consisted of the proceeds from divestitures of $275.7 million, partially offset by the purchase of property and equipment and capitalized software of $55.3 million, primarily related to our ERP initiative, which includes upgrading our information system platform, and the purchase of investments in unconsolidated affiliates of $13.9 million.

Net cash provided by investing activities from continuing operations for the year ended December 31, 2023 included the deconsolidation of subsidiaries, net of proceeds of $31.5 million and purchases of property and equipment of $41.6 million, partially offset by proceeds from divestitures of $21.1 million.

Net cash used in investing activities from discontinued operations for the year ended December 31, 2024 consisted of purchases of property and equipment of $2.5 million and divestitures of cash and cash equivalents and restricted cash of $4.8 million.

47

Net cash used in investing activities from discontinued operations for the year ended December 31, 2023 consisted of purchases of property and equipment of $4.7 million.

Net Cash Used in Financing Activities

We primarily finance our business initiatives through cash flows from operations, however, we also incur long-term debt or borrow under lines of credit when necessary to execute acquisitions. Cash flows from financing activities consisted of borrowings related to these lines of credit and subsequent payments of principal and financing fees. Additionally, many of our acquisition agreements include contingent consideration arrangements, which are generally based on the achievement of future financial performance by the operations attributable to the acquired companies. The portion of the cash payment up to the acquisition date fair value of the contingent consideration liability are classified as financing outflows, and amounts paid in excess of the acquisition date fair value of that liability are classified as operating outflows. From time to time, we may voluntarily repurchase our long-term debt to deploy capital that deleverages our balance sheet while generating a favorable rate of return.

Cash flows used in financing activities from continuing operations during the year ended December 31, 2024 were primarily related to repurchases of Senior Secured Notes and Term Loan Facility of $147.1 million, repayment of principal on our Term Loan Facility of $13.1 million, payments for taxes related to net share settlement of $12.8 million, payments of contingent consideration of $5.7 million and payments related to the share repurchase program of $34.1 million.

Cash flows used in financing activities from continuing operations during the year ended December 31, 2023 were primarily related to repurchases of Term Loan Facility and Senior Secured Notes debt of $156.6 million, repayment of principal on our Term Loan Facility of $13.5 million, payments of contingent consideration and holdback payments of $5.8 million, and open market purchases of $6.4 million of our Class A common stock under the 2021 Share Repurchase Program. This was partially offset by $2.2 million related to proceeds from shares issued under the 2020 Employee Stock Purchase Plan.

Cash flows used in financing activities from discontinued operations during the year ended December 31, 2024 were primarily related to contingent consideration payments of $4.4 million.

Cash flows provided by financing activities from discontinued operations during the year ended December 31, 2023 were primarily related to proceeds from government loans for COVID-19 relief, partially offset by principal payments on long-term debt and holdback payments.

Description of Credit Facilities

Senior Secured Credit Facilities

Advantage Sales & Marketing Inc. (the “Borrower”), our indirect wholly-owned subsidiary of the Company, has (i) a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $500.0 million, subject to borrowing base capacity (as may be amended from time to time, the “Revolving Credit Facility”) and (ii) a secured first lien term loan credit facility in an aggregate principal amount of $1.1 billion (as may be amended from time to time, the “Term Loan Facility” and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”).

Revolving Credit Facility

Our Revolving Credit Facility provides for revolving loans and letters of credit in an aggregate amount of up to $500.0 million, subject to borrowing base capacity. Letters of credit are limited to the lesser of (a) $150.0 million and (b) the aggregate unused amount of commitments under our Revolving Credit Facility then in effect. Loans under the Revolving Credit Facility may be denominated in either U.S. dollars or Canadian dollars. Bank of America, N.A. (“Bank of America”), will act as administrative agent and collateral agent. The Revolving Credit Facility matures five years after the date we enter into the Revolving Credit Facility. We may use borrowings under the Revolving Credit Facility to fund working capital and for other general corporate purposes, including permitted acquisitions and other investments.

Borrowings under the Revolving Credit Facility are limited by borrowing base calculations based on the sum of specified percentages of eligible accounts receivable plus specified percentages of qualified cash, minus the amount of any applicable reserves. Borrowings will bear interest at a floating rate, which can be either an adjusted Term SOFR or Alternative Currency Spread rate plus an applicable margin or, at the Borrower’s option, a base rate or Canadian Prime Rate plus an applicable margin. The applicable margins for the Revolving Credit Facility are 1.75%, 2.00% or 2.25%, with respect to Term SOFR or Alternative Currency Spread rate borrowings and 0.75%, 1.00%, or 1.25%, with respect to base rate or Canadian Prime Rate borrowings, in each case depending on average excess availability under the Revolving Credit Facility. The Borrower’s ability to draw under the Revolving Credit Facility or

48

issue letters of credit thereunder will be conditioned upon, among other things, the Borrower’s delivery of prior written notice of a borrowing or issuance, as applicable, the Borrower’s ability to reaffirm the representations and warranties contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.

The Borrower’s obligations under the Revolving Credit Facility are guaranteed by Karman Intermediate Corp. (“Holdings”) and all of the Borrower’s direct and indirect wholly owned material U.S. subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholds of aggregate assets and revenues of Canadian subsidiaries) (the “Guarantors”). The Revolving Credit Facility is secured by a lien on substantially all of Holdings’, the Borrower’s and the Guarantors’ assets (subject to certain permitted exceptions). The Borrower’s Revolving Credit Facility has a first-priority lien on the current asset collateral and a second-priority lien on security interests in the fixed asset collateral (second in priority to the liens securing the Notes and the Term Loan Facility discussed below), in each case, subject to other permitted liens.

The Revolving Credit Facility has the following fees: (i) an unused line fee of 0.375% or 0.250% per annum of the unused portion of the Revolving Credit Facility, depending on average excess availability under the Revolving Credit Facility; (ii) a letter of credit participation fee on the aggregate stated amount of each letter of credit equal to the applicable margin for adjusted Eurodollar rate loans, as applicable; and (iii) certain other customary fees and expenses of the lenders and agents thereunder.

The Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on the Borrower’s ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness, enter into transactions with affiliates or change our line of business. The Revolving Credit Facility will require the maintenance of a fixed charge coverage ratio (as set forth in the credit agreement governing the Revolving Credit Facility) of 1.00 to 1.00 at the end of each fiscal quarter when excess availability is less than the greater of $25.0 million and 10% of the lesser of the borrowing base and maximum borrowing capacity. Such fixed charge coverage ratio will be tested at the end of each quarter until such time as excess availability exceeds the level set forth above.

The Revolving Credit Facility provides that, upon the occurrence of certain events of default, the Borrower’s obligations thereunder may be accelerated and the lending commitments terminated. Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, material pension-plan events, certain change of control events and other customary events of default.

On October 28, 2021, the Borrower and Holdings entered into the First Amendment to ABL Revolving Credit Agreement, which amended the ABL Revolving Credit Agreement, dated October 28, 2020, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent (the “Prior Revolving Credit Facility”). This amendment was entered into by the Borrower to amend certain terms and provisions, including (i) reducing the interest rate floor for Eurocurrency rate loans from 0.50% to 0.00% and base rate loans from 1.50% to 1.00%, and (ii) updating the provisions by which U.S. Dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry.

On December 2, 2022, Borrower, Holdings and certain of the Borrower’s subsidiaries, entered into the Second Amendment to ABL Revolving Credit Agreement (the “Second Amendment”), which amends the ABL Revolving Credit Agreement, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent, and the other parties thereto. The Second Amendment was entered into by the Borrower to amend certain terms and provisions of the ABL Revolving Credit Agreement, including, among other things: (i) increasing the aggregate amount of maximum revolving commitments available from $400.0 million to $500.0 million; (ii) replacing the Eurocurrency Rate interest rate metric with a metric based on Term SOFR (as defined in the Second Amendment), whereby applicable borrowings in United States dollars will bear interest at a floating rate based on Term SOFR plus an applicable margin; (iii) reducing each applicable interest rate pricing tier based on the Average Historical Excess Availability (as defined therein) with respect to Term SOFR borrowings, Alternative Currency borrowings, base rate borrowings and Canadian Prime Rate borrowings, in each case for each pricing tier by 0.25% per annum; and (iv) extending the scheduled maturity date of the borrowings to December 2, 2027.

Term Loan Facility

The Term Loan Facility consists of a term loan credit facility denominated in U.S. dollars in an aggregate principal amount of $1.106 billion. Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per

49

annum of the principal amount. Borrowings will bear interest at a floating rate of Term SOFR plus an applicable margin of 4.25% per annum, subject to additional spread adjustment on SOFR ranging from 0.11% to 0.26%.

The Borrower may voluntarily prepay loans or reduce commitments under the Term Loan Facility, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty.

The Borrower will be required to prepay the Term Loan Facility with 100% of the net cash proceeds of certain asset sales (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios) and subject to certain reinvestment rights, 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow (such percentage subject to reduction based on the achievement of specific first lien net leverage ratios).

The Borrower’s obligations under the Term Loan Facility are guaranteed by Holdings and the Guarantors. Our Term Loan Facility is secured by a lien on substantially all of Holdings’, the Borrower’s and the Guarantors’ assets (subject to certain permitted exceptions). The Term Loan Facility has a first- priority lien on the fixed asset collateral (equal in priority with the liens securing the Notes) and a second-priority lien on security interests in the current asset collateral (second in priority to the liens securing the Revolving Credit Facility), in each case, subject to other permitted liens.

The Term Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the Borrower’s ability and that of our restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

The Term Loan Facility provides that, upon the occurrence of certain events of default, the Borrower’s obligations thereunder may be accelerated. Such events of default will include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other customary events of default.

On October 28, 2021, the Borrower, Holdings, and certain of the Borrower’s subsidiaries, entered into Amendment No. 1 to the First Lien Credit Agreement (the “First Lien Amendment”), which amended the First Lien Credit Agreement, dated October 28, 2020, by and among the Borrower, Holdings, Bank of America, as administrative agent and collateral agent, each lender party from time-to-time thereto, and the other parties thereto. The First Lien Amendment was entered into by the Borrower to reduce the applicable interest rate on the term loan from 5.25% to 4.50% per annum, resulting in estimated interest savings of approximately $9.9 million or $7.3 million, net of tax, per annum. Additional terms and provisions amended include (i) resetting the period for six months following October 28, 2021 in which a 1.00% prepayment premium shall apply to any prepayment of the term loan in connection with certain repricing events, and (ii) updating the provisions by which U.S. Dollar LIBOR will eventually be replaced with SOFR or another interest rate benchmark to reflect the most recent standards and practices used in the industry and by Bank of America. In May 2023 the Company amended the Term Loan Facility to replace the U.S. Dollar LIBOR provisions with SOFR, effective June 30, 2023. In April 2024 (the “Third Lien Amendment Effective Date”), the Company amended the Term Loan Facility to (i) reduce the applicable interest rate margin (a) from 4.50% to 4.25% for SOFR loans or (b) from 3.50% to 3.25% for base rate loans; and (ii) reset the period for six months following the Third Lien Amendment Effective Date in which a 1.00% prepayment premium shall apply to any prepayment of the term loans in connection with a Repricing Event (as defined in the amended First Lien Credit Agreement).

Senior Secured Notes

Effective as of October 28, 2020, Advantage Solutions FinCo LLC (“Finco”) issued $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”). Substantially concurrently with the issuance, Finco merged with and into Advantage Sales & Marketing Inc. (the “Issuer”), with the Issuer continuing as the surviving entity and assuming the obligations of Finco. The Notes were sold to certain financial institutions that then resold the Notes to certain non-U.S. persons pursuant to Regulation S under the Securities Act, and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 100% of their principal amount. The terms of the Notes are governed by an Indenture, dated as of October 28, 2020 (the “Indenture”), among Finco, the Issuer, the guarantors named therein (the “Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent.

Interest and maturity

Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 at a rate of 6.50% per annum, commencing on May 15, 2021. The Notes will mature on November 15, 2028.

50

Guarantees

The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S. subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholds of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.

Security and ranking

The Notes and the related guarantees are the general, senior secured obligations of the Issuer and the Notes Guarantors, are secured on a first-priority pari passu basis by security interests on the fixed asset collateral (equal in priority with liens securing the Term Loan Facility), and are secured on a second-priority basis by security interests on the current asset collateral (second in priority to the liens securing the Revolving Credit Facility and equal in priority with liens securing the Term Loan Facility), in each case, subject to certain limitations and exceptions and permitted liens.

The Notes and related guarantees rank (i) equally in right of payment with all of the Issuer’s and the Guarantors’ senior indebtedness, without giving effect to collateral arrangements (including the Senior Secured Credit Facilities) and effectively equal to all of the Issuer’s and the Guarantors’ senior indebtedness secured on the same priority basis as the Notes, including the Term Loan Facility, (ii) effectively subordinated to any of the Issuer’s and the Guarantors’ indebtedness that is secured by assets that do not constitute collateral for the Notes to the extent of the value of the assets securing such indebtedness and to indebtedness that is secured by a senior-priority lien, including the Revolving Credit Facility to the extent of the value of the current asset collateral and (iii) structurally subordinated to the liabilities of the Issuer’s non-Guarantor subsidiaries.

Optional redemption for the Notes

The Notes are redeemable at the applicable redemption prices specified in the Indenture plus accrued and unpaid interest. If the Issuer or its restricted subsidiaries sell certain of their respective assets or experience specific kinds of changes of control, subject to certain exceptions, the Issuer must offer to purchase the Notes at par. In connection with any offer to purchase all Notes, if holders of no less than 90% of the aggregate principal amount of Notes validly tender their Notes, the Issuer is entitled to redeem any remaining Notes at the price offered to each holder. The Issuer may voluntarily prepay loans or reduce commitments under the Notes, in whole or in part without premium or penalty.

Restrictive covenants

The Notes are subject to covenants that, among other things limit the Issuer’s ability and its restricted subsidiaries’ ability to: incur additional indebtedness or guarantee indebtedness; pay dividends or make other distributions in respect of, or repurchase or redeem, the Issuer’s or a parent entity’s capital stock; prepay, redeem or repurchase certain indebtedness; issue certain preferred stock or similar equity securities; make loans and investments; sell or otherwise dispose of assets; incur liens; enter into transactions with affiliates; enter into agreements restricting the Issuer’s subsidiaries’ ability to pay dividends; and consolidate, merge or sell all or substantially all of the Issuer’s assets. Most of these covenants will be suspended on the Notes when they have investment grade ratings from both Moody’s Investors Service, Inc. and S&P Global Ratings and so long as no default or event of default under the Indenture has occurred and is continuing.

Events of default

The following constitute events of default under the Notes, among others: default in the payment of interest; default in the payment of principal; failure to comply with covenants; failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; certain events of bankruptcy; failure to pay a judgment for payment of money exceeding a specified aggregate amount; voidance of subsidiary guarantees; failure of any material provision of any security document or intercreditor agreement to be in full force and effect; and lack of perfection of liens on a material portion of the collateral, in each case subject to applicable grace periods.

51

Contractual Obligations

The following summarizes our contractual obligations as of December 31, 2024:

[[GREPCENT_TABLE]]
[["(in thousands)","Total","","","Current","","","Long-Term"],["Operating lease liabilities(1)","$","37,971","","","$","13,323","","","$","24,648"],["Client deposits(2)","","12,906","","","","12,906","","","","\u2014"],["Total debt excluding deferred issuance costs(3)","","1,699,940","","","","13,250","","","","1,686,690"],["Other long-term liabilities on the consolidated balance sheets"],["Unpaid claims(4)","","69,635","","","","35,913","","","","33,722"],["Restructuring and reorganization(5)","","15,598","","","","15,598","","","","\u2014"],["Total contractual obligations","$","1,836,050","","","$","90,990","","","$","1,745,060"]]
[[/GREPCENT_TABLE]]

(1)
Refer to Note 9—Leases of our audited consolidated financial statements for the year ended December 31, 2024 for additional information regarding the maturity of operating lease liabilities.

(2)
Represents payments collected from our clients, primarily, associated with market development funds that arise out of our business.

(3)
We have an aggregate principal amount of $1.106 billion borrowing on the Term Loan Facility, which bears the applicable interest rate of 4.25% per annum, and $615.1 million in Senior Secured Notes, which is subject to a fixed interest rate of 6.5%. Refer to Note 8 — Debt of our audited consolidated financial statements for the year ended December 31, 2024 for additional information regarding the maturities of debt principal. Total debt excluding deferred issuance costs does not include the obligation of future interest payments.

(4)
Represents $59.4 million of an estimated liability under our workers’ compensation programs for claims incurred but unpaid and $10.3 million of employee insurance reserves as of December 31, 2024.

(5)
Refer to Note 7—Restructuring of our audited consolidated financial statements for the year ended December 31, 2024 for additional information regarding our restructuring and reorganization activities.

Cash and Cash Equivalents Held Outside the United States

As of December 31, 2024, and 2023, $65.0 million and $44.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries. The increase in cash and cash equivalents held by foreign subsidiaries during the year ended December 31, 2024 was primarily due to an increase in cash held by our Canadian subsidiary. As of December 31, 2024 and 2023, $18.5 million and $24.6 million, respectively, of our cash and cash equivalents were held by foreign branches.

We assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and recorded a deferred tax liability of approximately $0.6 million of withholding tax as of December 31, 2024 for unremitted earnings in Canada with respect to which we do not have an indefinite reinvestment assertion. We will continue to evaluate our cash needs, however we currently do not intend, nor do we foresee a need, to repatriate funds from the foreign subsidiaries except for Canada. We have continued to assert indefinite reinvestment on all other earnings as it is necessary for continuing operations and to grow the business. If at a point in the future our assertion changes, we will evaluate tax-efficient means to repatriate the earnings. In addition, we expect existing domestic cash and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities such as business acquisitions or to settle debt, we could elect to repatriate future earnings from foreign jurisdictions. These alternatives could result in higher income tax expense or increased interest expense. Excluding Canada, we consider the remaining undistributed earnings of our foreign subsidiaries, as of December 31, 2024, to be indefinitely reinvested and, accordingly, no provision has been made for taxes in excess of the $0.6 million noted above.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries that are not included in our consolidated financial statements. Additionally, we do not have an interest in, or relationships with, any special-purpose entities.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. We evaluate our accounting policies, estimates and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.

52

We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates and judgments used in the preparation of our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in the footnotes to our audited consolidated financial statements included elsewhere in this Annual Report.

Revenue Recognition

We recognize revenue when control of promised goods or services is transferred to the client in an amount that reflects the consideration that we expect to be entitled to in exchange for such goods or services. Substantially all of our contracts with clients involve the transfer of a service to the client, which represents a performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided. In most cases, the contracts provide for a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). For these contracts, we allocate the ratable portion of the consideration based on the services provided in each period of service to such period.

Revenues related to the Branded Services segment are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services.

Revenues within the Branded Services segment are further disaggregated between brokerage services, branded merchandising services, omni-commerce marketing services, and revenues related to our European joint venture (prior to the deconsolidation during fiscal year 2023). Brokerage services revenues are primarily outsourced sales and services for branded consumer goods manufacturers at retailer headquarters, in-store and online. Branded merchandising services relate to merchandising in-store and online for branded consumer goods manufacturers. Omni-commerce marketing services primarily relate to digital and field marketing services.

Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where we manage highly customized, large-scale sampling programs for leading brands and retailers.

Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandising strategies and marketing strategies within retailer locations, including retail media networks and analyzing shopper behavior. Revenues within the Retailer Services segment are further disaggregated between advisory services, retailer merchandising services and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development. Retailer merchandising services primarily relate to the execution of merchandising strategies. Agency services primarily consist of providing marketing strategies within retail locations.

Our revenue recognition policies generally result in recognition of revenues at the time services are performed. Our accounting policy for revenue recognition has an impact on our reported results and relies on certain estimates that require judgments on the part of management. We record an allowance as a reduction to revenue for differences between estimated revenues and the amounts ultimately invoiced to our clients based on our historical experience and current trends. Cash collected in advance of services being performed is recorded as deferred revenues.

We have contracts that include variable consideration whereby the ultimate consideration is contingent on future events such as the client’s sales to retailers, hours worked, event count, costs incurred and performance incentive bonuses. Commission revenues are generally earned upon performance of headquarter relationship management, analytics, insights and intelligence, e-commerce, administration and retail services arrangements. As part of these arrangements, we provide a variety of services to consumer goods manufacturers in order to improve the manufacturer’s sales to retailers. This includes primarily outsourced sales, business development, category and space management, relationship management and in-store sales strategy services. In exchange for these services, we earn an agreed upon percentage of our client’s sales to retailers, which is agreed upon on a manufacturer-by-manufacturer basis. We may be entitled to additional fees upon meeting specific performance goals or thresholds, which we refer to as bonus revenue. The variability of the consideration for the services transferred during a reporting period is typically resolved by the end of the reporting period. However, for certain client contracts, we estimate the variable consideration for the services that have been transferred to the client during the reporting period. We typically estimate the variable consideration based on the expected value method. Estimates are based on historical experience and current facts known during the reporting period. We recognize revenue related to variable consideration if it is probable that a significant reversal of revenue recognized will not occur. When such probable

53

threshold is not satisfied, we will constrain some or all of the variable consideration, and such constrained amount will not be recognized as revenue until the probable threshold is met or the uncertainty is resolved and the final amount is known. We record an adjustment to revenue for differences between estimated revenues and the amounts ultimately invoiced to the client. Adjustments to revenue during the current period related to services transferred during prior periods were not material for the year ended December 31, 2024.

We have contracts that include fixed consideration such as a fee per project or a fixed monthly fee. For contracts with a fee per project, revenue is recognized over time using an input method such as hours worked that reasonably depicts our performance in transferring control of the services to the client. We determined that the input method represents a reasonable method to measure the satisfaction of the performance obligation to the client. For contracts with a fixed monthly fee, revenue is recognized using a time-based measure resulting in a straight-line revenue recognition. A time-based measure was determined to represent a reasonable method to measure the satisfaction of the performance obligation to the client because we have a stand ready obligation to make itself available to provide services upon the client’s request or the client receives the benefit from our services evenly over the contract period.

We evaluate each client contract individually in accordance with the applicable accounting guidance to determine whether we act as a principal (whereby we would present revenue on a gross basis) or as an agent (whereby we would present revenue on a net basis). While we primarily act as a principal in our arrangements and report revenues on a gross basis, given the varying terms of our client contracts, we will occasionally act as an agent and in such instances present revenues on a net basis.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired in an acquisition. We test for impairment of goodwill at the reporting unit level. We generally combine components that have similar economic characteristics, nature of services, types of client, distribution methods and regulatory environment. In connection with the Company’s reorganization and the associated change in operating segments, the Company reassessed its reporting units and concluded that it has five reporting units (Branded Services, Branded Agencies, Experiential Services, Merchandising and Retailer Agencies). As a result, the Company performed the required impairment assessments directly before and immediately after the change in reporting units as of January 1, 2024. In conjunction with the tests performed as of January 1, 2024, each of the fair values for the reporting units tested was in excess of its carrying amount. The fair values of the Branded Agencies and Experiential Services reporting units exceeded their respective carrying values by less than 20%.

During the second quarter of fiscal year 2024, we determined a triggering event occurred and an impairment assessment was warranted for the Branded Agencies reporting unit goodwill due to the pending sale of one of the businesses that comprised a substantial portion of the assets, liabilities, and prospective cash flows of the Branded Agencies reporting unit. Additionally, during the fourth quarter of fiscal year 2024, we determined a triggering event occurred and an impairment assessment was warranted for the Branded Services reporting unit goodwill due to the loss of clients and a reduction in the scope of client services as our clients implemented internal cost reduction initiatives in response to challenges in the broader markets in which they operate.

We utilize a combination of income and market approaches to estimate the fair value of our reporting units. The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the reporting units’ revenue growth rates, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, terminal growth rates, discount rates, and incremental net working capital, all of which require significant management judgment.

The market approach applies market multiples derived from the historical earnings data of selected guideline publicly-traded companies to our reporting units’ businesses to yield a second assumed value of each reporting unit, which requires significant management judgment. The guideline companies are first screened by industry group and then further narrowed based on the reporting units’ business descriptions, markets served, competitors, EBITDA margins and revenue size. Market multiples are then selected from within the range of these guideline companies’ multiples based on the subject reporting unit. We compare a weighted average of the output from the income and market approaches to the carrying value of each reporting unit. We also compare the aggregate estimated fair value of our reporting units to the estimated value of our total market capitalization. The assumptions in the income and market approach are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. We based our fair value estimates on assumptions we believe to be reasonable but which are unpredictable and inherently uncertain. A change in these underlying assumptions would cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future. Additionally, if actual results are not consistent with the estimates and assumptions or if there are significant changes to our planned strategy, it may cause fair value to be less than the carrying amounts and result in an impairment of goodwill in the future.

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During the second quarter of fiscal year 2024, we determined a triggering event occurred and an impairment assessment was warranted for the Branded Agencies reporting unit goodwill due to the pending sale of one of the businesses that comprised a substantial portion of the assets, liabilities and prospective cash flows of the Branded Agencies reporting unit. As a result of the impairment test performed, we recognized a goodwill impairment charge of $99.7 million related to the Company's Branded Agencies reporting unit goodwill during the year ended December 31, 2024, which has been reflected in “Impairment of goodwill and indefinite-lived asset” in the Consolidated Statements of Operations and Comprehensive Loss. As a result of this charge, an immaterial amount of goodwill remains in this reporting unit.

The following table represents a sensitivity analysis on the goodwill impairment charge (under the income approach without consideration to the market approach) for the Branded Agencies reporting unit depicting the percent increase in the $99.7 million charge had the fair value been estimated with a 0.5% increase in the discount rate used, a 1.0% decrease in the long-term growth rate and a 1.0% increase in the net working capital assumptions used at May 31, 2024.

[[GREPCENT_TABLE]]
[["Assumption Change","","% Increase in Impairment Charge"],["0.5% increase in discount rate","","","5.0","%"],["1.0% decrease in long-term growth rate","","","4.2","%"],["1.0% increase in incremental working capital","","","2.5","%"]]
[[/GREPCENT_TABLE]]

In connection with the annual quantitative impairment test as of October 1, 2024, we concluded that the goodwill was not impaired as of October 1, 2024. Additionally, no triggering events were identified for the Branded Agencies, Experiential Services, Merchandising and Retailer Agencies reporting units through December 31, 2024. The fair values of the Branded Services, Branded Agencies and Merchandising reporting units exceeded their respective carrying values by less than 20%.

During the fourth quarter of fiscal year 2024, the Company identified a triggering event that required an impairment assessment of goodwill for the Branded Services reporting unit. The triggering event was due to the loss of clients and a reduction in the scope of client services as the Company’s clients implemented internal cost reduction initiatives in response to challenges in the broader markets in which they operate. As a result of the goodwill impairment test, the Company recognized a goodwill impairment charge of $133.5 million related to the Branded Services reporting unit during the year ended December 31, 2024. This charge is reflected in “Impairment of goodwill and indefinite-lived asset” in the Consolidated Statements of Operations and Comprehensive Loss.

The following table represents a sensitivity analysis on the goodwill impairment charge (under the income approach without consideration to the market approach) for the Branded Services reporting unit depicting the percent increase in the $133.5 million charge had the fair value been estimated with a 0.1% increase in the discount rate used, a 0.1% decrease in the long-term growth rate and a 1.0% increase in the net working capital assumptions used at December 31, 2024. Under each of the sensitivity scenarios presented, the resulting impairment charge would fully reduce the goodwill balance of the Branded Services reporting unit to zero as of December 31, 2024.

[[GREPCENT_TABLE]]
[["Assumption Change","","% Increase in Impairment Charge"],["0.1% increase in discount rate","","","23.9","%"],["0.1% decrease in long-term growth rate","","","27.5","%"],["1.0% increase in incremental working capital","","","24.3","%"]]
[[/GREPCENT_TABLE]]

The uncertainty and volatility in the economic environment which we operate could have an impact on our future growth and could result in future impairment charges. There is no assurance that actual future earnings, cash flows or other assumptions for the reporting units will not significantly decline from these projections.

Indefinite-Lived Asset

Our indefinite-lived intangible asset is comprised of our trade name. The intangible asset with an indefinite useful life is not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances change that would create a triggering event. We have the option to perform a qualitative assessment of whether it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value before performing a quantitative impairment test. We test our indefinite-lived intangible assets for impairment using a relief from royalty method by comparing the estimated fair values of the indefinite-lived intangible assets with the carrying values. The estimates used in the determination of fair value are subjective in nature and involve the use of significant assumptions. These estimates and assumptions include revenue growth rates, terminal growth rate, discount rates and royalty rate, which requires significant management judgment. The assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from the estimates.

55

In connection with our annual quantitative impairment tests as of October 1, 2024 and 2023, we concluded that our indefinite-lived intangible asset was not impaired.

During the fourth quarter of December 31, 2024, we recognized an intangible asset impairment charge of $42.0 million as a result of the triggering event for the Branded Services reporting unit.

The following table represents a sensitivity analysis on the indefinite-lived trade name intangible asset depicting the percent increase in the $42.0 million charge related to the indefinite-lived trade name had the fair value been estimated with a 0.1% increase in the discount rate used and a 0.1% decrease in the royalty rate used at December 31, 2024.

[[GREPCENT_TABLE]]
[["Assumption Change","","% Increase in Impairment Charge"],["0.5% increase in discount rate","","","70.6","%"],["0.1% increase in royalty rate","","","40.0","%"]]
[[/GREPCENT_TABLE]]

During the fourth quarter of fiscal year 2023, we determined a triggering event occurred and an impairment assessment was warranted for our indefinite-lived trade name due to the deconsolidation of our European joint venture and the planned divestitures of a collection of foodservice businesses. As a result, we recognized an intangible asset impairment charge of $43.5 million related to our indefinite-lived trade name during the year ended December 31, 2023, which has been reflected in “Impairment of goodwill and indefinite-lived asset” in the Consolidated Statements of Operations and Comprehensive Loss.

Stock-Based Compensation

Performance restricted stock units (“PSUs”) are subject to the achievement of certain performance conditions based on measurements of our Adjusted EBITDA margin and cash earnings in the respective measurement period and the recipient’s continued service to us. The PSUs are scheduled to vest over a three-year period from the date of grant and may vest from 0% to 200% of the number of shares. The fair value of PSU grants was equal to the closing price of our stock on the date of the applicable grant. Restricted stock units (“RSUs”) are subject to the recipient’s continued service to us. The RSUs are generally scheduled to vest in increments of one-third over a three year period and are subject to the provisions of the RSU agreement under the Advantage Solutions. Inc. 2020 Incentive Award Plan, as amended and restated (the “Plan”).

Refer to Note 12—Stock Based Compensation and Other Benefit Plans to our audited consolidated financial statements included elsewhere in this Annual Report for details regarding stock-based compensation plans.

Recently Issued Accounting Pronouncements

Refer to Note 1—Organization and Significant Accounting Policies – Recent Accounting Pronouncements, to our audited consolidated financial statements included elsewhere in this Annual Report.