What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-12 · 189 added, 310 removed, 182 unchanged (73% of the section changed)

10 unchanged sentences

Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”), we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Executive Overview

Business Overview

We are a leading business solutions provider to consumer goods manufacturers and retailers.

2 unchanged sentences

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.

Through our Branded Services segment, which generated approximately 35.3% and 38.2% of our revenues in the three months ended March 31, 2025 and 2024, respectively, we provide services to branded consumer goods manufacturers through three main categories:

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.

We report financial results for the following three reportable segments:

Through our Branded Services segment , which generated approximately 34.5% and 37.5% of our revenues in the six months ended June 30, 2025 and 2024, respectively, we provide services to branded consumer goods manufacturers through three main categories:

brokerage, branded merchandising and omni-commerce marketing services.

2 unchanged sentences

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 38.2% and 35.7% of our revenues in the three months ended March 31, 2025 and 2024, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations.

Through our Experiential Services segment , which generated approximately 39.0% and 36.1% of our revenues in the six months ended June 30, 2025 and 2024, 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 26.5% and 26.1% of our revenues in the three months ended March 31, 2025 and 2024, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.

Through our Retailer Services segment , which generated approximately 26.5% and 26.3% of our revenues in the six months ended June 30, 2025 and 2024, 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.

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.

Our financial performance for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 includes:

• Revenues decreased by $39.6 million, or 4.6%, to $821.8 million;

• Operating loss from continuing operations decreased by $15.3 million to $14.6 million;

• Net loss from continuing operations increased by $6.0 million to $56.1 million;

• Adjusted Net Income decreased by $25.3 million, or 274.5%, to $16.1 million;

• Adjusted EBITDA from Continuing Operations decreased by $12.5 million or 17.6%, to $58.2 million.

Factors Affecting Our Business and Financial Reporting

There are a number of factors that affect the performance of our business and the comparability of our results from period to period including:

• 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.

• Acquisitions and Divestitures.

We have grown our business in part by acquiring businesses, both domestic and international.

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 our service offerings to ensure more focus on our mission of converting shoppers into buyers for consumer goods companies and retailers.

To that end, we have disposed of 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.

• Depreciation and Amortization.

As a result of the acquisition of our business by Karman Topco L.P.

(“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 income (loss) and net income (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.

• 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.

• Seasonality.

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 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.

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 associates, as well as other project-related expenses.

A number of costs associated with our associates 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 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 divestitures activities.

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 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 debt agreements as described below as well as gains on repurchases of debt and fair value adjustments for our derivative financial instruments.

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, 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 March 31, 2025 and 2024, respectively.

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.

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 receipts for services performed, borrowings under the Revolving Credit Facility and other debt.

Our principal uses of cash are operating expenses, working capital requirements, investments in our technology platforms, repayment of debt and repurchases of our Class A common shares.

Executive Summary

Three Months Ended

Change Reported

Six Months Ended

Change Reported

(amounts in thousands)

Operating income (loss) from continuing operations

Net loss from continuing operations

Adjusted Net Income (1)

Adjusted Net Income is a non-GAAP financial measure.

Adjusted Net Income means net (loss) income before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived assets, (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) gain on repurchases of Term Loan Facility and Notes debt, (xiii) costs associated with (recovery from) the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance, and (xv) related tax adjustments.

Adjusted EBITDA (1)

Branded Services

Experiential Services

Retailer Services

Adjusted EBITDA from Continuing Operations

(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 income to Adjusted Net Income and Adjusted EBITDA from Continuing Operations, see “ —Non-GAAP Financial Measures .”

Revenues increased by $0.4 million for the three months ended June 30, 2025, and decreased by $39.3 million, or 2.3%, for the six months ended June 30, 2025, both as compared to the same period in 2024.

Reimbursable expenses increased in the three months and six months ended June 30, 2025 by $14.6 million and $12.4 million, respectively, compared to the same period in 2024.

After consideration of reimbursable expenses, the decline in revenue was driven predominantly by our clients prioritizing cost optimization, including a reduction in order volume, during a period of uncertain macro-economic environment.

Also impacting year-over-year comparisons are the loss of certain clients in the second half of 2024.

Adjusted Net Income decreased by $7.5 million for the three months ended June 30, 2025 and $32.8 million for the six months ended June 30, 2025, both as compared to the same period in 2024, due to the incurrence of tax expense in fiscal 2025 versus a tax benefit in fiscal 2024, lower Adjusted EBITDA, as discussed below, partially offset by lower interest expense and higher equity earnings from unconsolidated investments.

Adjusted EBITDA from Continuing Operations decreased by $3.5 million for the three months ended June 30, 2025, and $15.9 million for the six months ended June 30, 2025, both as compared to the same period in 2024, predominantly due to lower order volume and a reduction of client sales and marketing investments driven by an uncertain macro-economic environment, the impact of staffing challenges, which were significantly remediated in the second quarter, partially offset by lower fixed compensation costs and discretionary bonus.

Non-GAAP Financial Measures

In the accompanying analysis of financial results, we include certain financial measures that are not presented in accordance with U.S.

generally accepted accounting principles (“GAAP”).

These non-GAAP financial measures are derived from our consolidated and segment financial information but exclude or adjust for certain items that are included in the most directly comparable GAAP measures.

We believe these non-GAAP (“Non-GAAP”) financial measures provide investors with additional insight into our operating performance, underlying business trends, and period-over-period comparability.

However, these measures are not in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is provided below:

• Adjusted Net Income

• Adjusted EBITDA from Continuing Operations

• Adjusted EBITDA by Segment

We define Adjusted Net Income, which is a non-GAAP financial measure, as net (loss) income before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived assets, (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) gain on repurchases of Term Loan Facility and Notes (as such terms are defined below) debt, (xiii) COVID-19 benefits received, (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 Net (loss) income, 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 (loss) 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 (recovery from) the Take 5 Matter, (xvi) EBITDA for economic interests in investments and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

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 (recovery from) the Take 5 Matter, (xii) EBITDA for economic interests in investments and (xiii) 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.

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

Adjusted EBITDA from Continuing Operations means net (loss) 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) COVID-19 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 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) COVID-19 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 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) income or operating income (loss), our most directly comparable measures presented on a GAAP basis.

Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to

Adjusted EBITDA from Continuing Operations.

Neither Adjusted EBITDA from Continuing Operations nor Adjusted EBITDA by Segment should be considered as an alternative for Net (loss) income or operating income (loss), 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.

Transformation Strategy

In July 2024, we announced a restructuring plan as part of our continued transformation strategy to improve our cost structure and intend 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 the clients.

The overall project was substantially completed at the end of fiscal year 2024.

We are in the process of implementing a new global enterprise resource planning (“ERP”) system, which is expected to occur in phases throughout fiscal year 2025.

During the three months ended March 31, 2025, the Company deployed the new ERP for our North America operations.

As part of the implementation, the Company completed significant pre-implementation testing and post-implementation testing and monitoring and recognized reorganization related expenses related to the implementation.

Results of Operations for the Three Months Ended March 31, 2025 and 2024

The following table sets forth items derived from the Company’s consolidated statements of operations for the three months ended March 31, 2025 and 2024 in dollars and as a percentage of total revenues.

Three Months Ended March 31,

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

The following table sets forth items derived from the Company’s consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 in dollars and as a percentage of total revenues.

Three Months Ended June 30,

Six Months Ended June 30,

(amounts in thousands)

1 unchanged sentence

Selling, general, and administrative expenses

Impairment of goodwill

Depreciation and amortization

1 unchanged sentence

Total operating expenses

Operating loss from continuing operations

Operating income (loss) from continuing operations

Other expenses:

5 unchanged sentences

Net loss from continuing operations

Net income from discontinued operations, net of tax

net income from discontinued operations attributable to noncontrolling interest, net of tax

Net loss attributable to stockholders of Advantage Solutions Inc.

Other Financial Data

Adjusted Net Income (1)

Adjusted EBITDA from Continuing Operations (1)

(1) Adjusted Net Income and Adjusted EBITDA from Continuing Operations are financial measures that are not calculated in accordance with GAAP.

Comparison of the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2025 and 2024

Three Months Ended June 30,

(amounts in thousands)

3 unchanged sentences

Total revenues

Total revenues decreased by $39.6 million, or 4.6%, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The Branded Services segment revenues decreased $39.2 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The decrease in revenues was primarily due to a weaker economic environment for our consumer package goods clients and an intentional client resignation during fiscal year 2024.

The Experiential Services segment revenues increased $6.7 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The increase in revenues was primarily due to an increase in our events per day volume.

The Retailer Services segment revenues decreased $7.1 million during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

The decrease in revenues was primarily due to staffing challenges, partially offset by improved pricing strategies.

Branded Services segment revenues decreased $27.1 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, The decrease in revenues was primarily due to market headwinds negatively impacting brokerage and omni-commerce marketing services as our clients continue to manage their costs, as well as due to certain client losses experienced in the second half of fiscal year 2024, as previously communicated.

Experiential Services segment revenues increased $28.2 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, of which $14.3 million of the increase is due to higher reimbursable expenses.

After consideration of reimbursable expenses, the remaining increase in revenues was primarily due to higher events per day volume, primarily driven by improved staffing and higher pricing.

Retailer Services segment revenues decreased slightly, or $0.7 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Higher merchandising activity driven by improved staffing and better pricing were more than offset by lower advisory and agency services.

Cost of Revenues

Cost of revenues as a percentage of revenues for the three months ended March 31, 2025 was 87.9%, as compared to 87.3% for the three months ended March 31, 2024.

The increase as a percentage of revenues was largely attributable to higher IT-related expenses, partially offset by lower compensation expense.

Cost of revenues as a percentage of revenues for the three months ended June 30, 2025 was 85.5%, as compared to 86.0% for the three months ended June 30, 2024.

The net decrease as a percentage of revenues was largely attributable to lower fixed labor costs, driven by restructuring events, lower discretionary bonus, partially offset by higher IT costs from transformation initiatives, and higher reimbursable expenses.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses as a percentage of revenues for the three months ended March 31, 2025 was 7.9%, compared to 10.3% for the three months ended March 31, 2024.

The decrease as a percentage of revenues was primarily due to a $22.8 million decrease in costs associated with our internal reorganization activities.

Selling, general, and administrative expenses as a percentage of revenues for the three months ended June 30, 2025 was 7.9%, compared to 7.2% for the three months ended June 30, 2024.

The increase as a percentage of revenues was primarily driven by higher shared service costs, an increase in bad debt expense, partially offset by lower compensation and lower restructuring costs.

Depreciation and Amortization Expense

Depreciation and amortization expense was $50.4 million for the three months ended March 31, 2025 compared to $49.7 million for the three months ended March 31, 2024.

The increase was due to a $1.9 million increase in depreciation expense as a result of an increase in property and equipment, partially offset by a $1.4 million decrease in amortization expense as a result of intangible asset impairment charges incurred during fiscal year 2024.

Depreciation and amortization expense was $50.7 million for the three months ended June 30, 2025 compared to $51.3 million for the three months ended June 30, 2024.

The net decrease was primarily due to a $1.3 million decrease in amortization expense as a result of intangible asset impairment charges incurred during fiscal year 2024, partially offset by a $0.6 million increase in depreciation expense, due to an increase in software amortization as a result of our increased investment in software assets.

Operating (Loss) Income from Continuing Operations

Three Months Ended March 31,

Three Months Ended June 30,

(amounts in thousands)

3 unchanged sentences

Total operating loss from continuing operations

In the Branded Services segment, the decrease in operating loss during the three months ended March 31, 2025 was primarily due to a decrease in costs associated with our internal reorganization activities, partially offset by the decrease in revenues described above.

In the Experiential Services segment, operating loss during the three months ended March 31, 2025 was relatively unchanged.

During the three months ended March 31, 2025, revenue increased as described above, however this increase was largely offset by increased labor costs.

In the Retailer Services segment, operating loss improved $8.4 million to operating income for the three months ended March 31, 2025.

The increase in operating income was primarily due to a decrease in costs associated with our internal reorganization activities, partially offset by the decrease in revenues described above.

In the Branded Services segment, the decrease in operating loss during the three months ended June 30, 2025 was due to a non-cash goodwill impairment charge of $99.7 million related to the Company's Branded Agencies reporting unit goodwill during the three months ended June 30, 2024.

In the Experiential Services segment, the increase in operating income during the three months ended June 30, 2025 was due to the increase in revenues as discussed above.

In the Retailer Services segment, operating income for the three months ended June 30, 2025 was materially consistent with operating income during the three months ended June 30, 2024.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability was an immaterial non-cash expense for the three months ended March 31, 2025 compared to $0.3 million of non-cash expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants for the three months ended March 31, 2024.

Change in fair value of warrant liability was an immaterial non-cash expense for the three months ended June 30, 2025, as compared to $0.7 million of non-cash expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants for the three months ended June 30, 2024.

Interest Expense, net

Interest expense, net decreased by $1.4 million, or 3.9%, to $34.4 million for the three months ended March 31, 2025, from $35.8 million for the three months ended March 31, 2024.

The decrease in interest expense was primarily due to lower debt balance as a result of repurchases of Term Loan Facility and Notes as further described in “ Liquidity and Capital Resources—Description of Credit Facilities—Senior Secured Notes, ” partially offset by a $0.9 million decrease in gains from the repurchases of Notes and a $5.8 million increase for fair value adjustments for our derivative financial instruments.

Interest expense, net decreased by $3.9 million, or 9.9%, to $35.8 million for the three months ended June 30, 2025, from $39.8 million for the three months ended June 30, 2024.

The decrease in interest expense was primarily due to lower debt balance as a result of repurchases of debt associated with the Term Loan Facility and Notes as further described in “ Liquidity and Capital Resources—Repurchases of Shares and Debt—Repurchases of Term Loan Facility and Notes, ” partially offset by a $1.6 million increase in fair value adjustments for our derivative financial instruments.

Provision for (Benefit from) Income Taxes

Provision for income taxes was $7.1 million for the three months ended March 31, 2025 as compared to $15.9 million of benefit from income taxes for the three months ended March 31, 2024.

The fluctuation in the income tax provision was primarily attributable to a decrease in the pretax loss during the three months ended March 31, 2025 in comparison to the pretax loss incurred during the three months ended March 31, 2024.

Further, an additional valuation allowance was established on interest expense limitation carryforward for the three months ended March 31, 2025.

Provision for income taxes was $4.6 million for the three months ended June 30, 2025, as compared to $17.3 million of benefit from income taxes for the three months ended June 30, 2024.

The fluctuation in the income tax provision was primarily attributable to a change in our effective tax rate and a decrease in the pretax loss compared to the prior period.

Although we generated a pretax loss on continuing operations in the three months ended June 30, 2025, our effective tax rate results in a tax expense due to the requirement to record a valuation allowance on tax benefits associated with the deduction for interest expense.

Also negatively impacting income taxes, we recorded a deferred tax liability on earnings in Canada that we repatriated in the second quarter of fiscal 2025.

Net Loss from Continuing Operations

Net loss from continuing operations was $56.1 million for the three months ended March 31, 2025, compared to net loss from continuing operations of $50.1 million for the three months ended March 31, 2024.

The increase in net loss from continuing operations was primarily driven by the decrease in revenues noted above, partially offset by the decrease in expense associated with our internal reorganization activities.

Adjusted Net Income

The decrease in Adjusted Net Income for the three months ended March 31, 2025 was primarily attributable to a decrease in revenues, partially offset by a decrease in selling, general and administrative expenses.

For a reconciliation of Adjusted Net Income to Net income, see “ — Non-GAAP Financial Measures.”

Adjusted EBITDA from Continuing Operations and Adjusted EBITDA by Segment

Three Months Ended March 31,

Net loss from continuing operations was $30.4 million for the three months ended June 30, 2025, compared to net loss from continuing operations of $113.0 million for the three months ended June 30, 2024.

The decrease in net loss from continuing operations was primarily driven by a non-cash goodwill impairment charge of $99.7 million related to the Company's Branded Agencies reporting unit goodwill during the three months ended June 30, 2024, lower interest expense, and lower reorganization expenses, partially offset by higher income tax expense.

Comparison of the Six Months Ended June 30, 2025 and 2024

Six Months Ended June 30,

(amounts in thousands)

2 unchanged sentences

Retailer Services

Total Adjusted EBITDA from Continuing Operations

Adjusted EBITDA from Continuing Operations was $58.2 million for the three months ended March 31, 2025, compared to $70.6 million for the three months ended March 31, 2024.

The decrease in Adjusted EBITDA was primarily attributable to a decrease in the Branded Services segment, which was driven by the decrease in revenues as described above partially offset by a decrease in costs associated with our internal reorganization activities.

In the Experiential Services segment, the decrease in Adjusted EBITDA was primarily driven by an increase in labor costs, partially offset by the increase in revenues as described above.

In the Retailer Services segment, the decrease in Adjusted EBITDA was primarily attributable to the decrease in revenues described above, partially offset by a decrease in costs associated with our internal reorganization activities.

For a reconciliation of Adjusted EBITDA from Continuing Operations to Net income, see “—Non-GAAP Financial Measures.”

Non-GAAP Financial Measures

Adjusted Net Income is a non-GAAP financial measure.

Adjusted Net Income should not be considered as an alternative for Net income, our most directly comparable measure presented on a GAAP basis.

Total revenues

Branded Services segment revenues decreased $66.3 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, of which $13.3 million of the decrease is due to lower reimbursable expenses.

After consideration of reimbursable expenses, the remaining decrease in revenues was primarily due to market headwinds negatively impacting brokerage and omni-commerce marketing services as our clients continue to manage their costs, as well as due to certain client losses experienced in the second half of fiscal year 2024, as previously communicated.

Experiential Services segment revenues increased $34.9 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024,of which $25.7 million of the increase is due to higher reimbursable expenses.

After consideration of reimbursable expenses, the remaining increase in revenues was primarily due to an increase in our events per day volume, primarily driven by improved staffing.

Retailer Services segment revenues decreased $7.8 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The decrease in revenues was primarily due to staffing challenges experienced in the first quarter of fiscal year 2025, which were substantially remediated in the second quarter, partially offset by improved pricing.

Cost of Revenues

Cost of revenues as a percentage of revenues for the six months ended June 30, 2025 was unchanged at 86.7%, as compared to the same period in the prior year with lower fixed labor costs, driven by restructuring events, lower discretionary bonus, were offset by higher IT costs from transformation initiatives, and higher reimbursable expenses.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses as a percentage of revenues for the six months ended June 30, 2025 was 7.9%, compared to 8.8% for the six months ended June 30, 2024.

The decrease as a percentage of revenues was

primarily due to lower compensation expense and lower restructuring costs, partially offset by higher shared service costs and an increase in bad debt expense.

Depreciation and Amortization Expense

Depreciation and amortization expense was unchanged at $101.1 million for the six months ended June 30, 2025 and June 30, 2024.

An increase in depreciation expense as a result of an increase in software amortization on increased investment in software assets, was effectively offset by a decrease in amortization expense resulting from intangible asset impairment charges incurred during fiscal year 2024.

Operating (Loss) Income from Continuing Operations

Six Months Ended June 30,

(amounts in thousands)

Branded Services

Experiential Services

Retailer Services

Total operating loss from continuing operations

In the Branded Services segment, the decrease in operating loss during the six months ended June 30, 2025 was primarily due to a non-cash goodwill impairment charge of $99.7 million related to the Company's Branded Agencies reporting unit goodwill during the three months ended June 30, 2024 and the impact of lower revenues discussed above.

In the Experiential Services segment, the increase in operating income during the six months ended June 30, 2025 was primarily driven by the increase in revenues discussed above.

In the Retailer Services segment, the increase in operating income for the six months ended June 30, 2025 was primarily due to a decrease in costs associated with our internal reorganization activities, partially offset by the decrease in revenues described above.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability was an immaterial non-cash expense for the six months ended June 30, 2025 compared to $0.4 million of non-cash gain resulting from a fair value adjustment to warrant liability with respect to the private placement warrants for the six months ended June 30, 2024.

Interest Expense, net

Interest expense, net decreased by $5.3 million, or 7.1%, to $70.2 million for the six months ended June 30, 2025, from $75.5 million for the six months ended June 30, 2024.

The decrease in interest expense was primarily due to lower debt balance as a result of repurchases of Term Loan Facility and Notes as further described in “ Liquidity and Capital Resources—Repurchases of Shares and Debt—Repurchases of Term Loan Facility and Notes, ” partially offset by a $7.4 million increase for fair value adjustments for our derivative financial instruments.

Provision for (Benefit from) Income Taxes

Provision for income taxes was $11.8 million for the six months ended June 30, 2025 as compared to $33.2 million of benefit from income taxes for the six months ended June 30, 2024.

The fluctuation in the income tax provision was primarily attributable to a change in our effective tax rate, and a decrease in the pretax loss compared to the prior period.

Although we generated a pretax loss on continuing operations in the six months ended June 30, 2025, our effective tax rate results in a tax expense due to the requirement to record a valuation allowance on tax benefits associated with the deduction for interest expense.

Also negatively impacting income taxes, we recorded a deferred tax liability on earnings in Canada that we repatriated in the second quarter.

Net Loss from Continuing Operations

Net loss from continuing operations was $86.6 million for the six months ended June 30, 2025, compared to net loss from continuing operations of $163.1 million for the six months ended June 30, 2024.

The decrease in net loss from continuing operations was primarily driven by a non-cash goodwill impairment charge of $99.7 million related to the Company's Branded Agencies reporting unit goodwill during the three months ended June 30, 2024, lower reorganization and lower interest expense, partially offset by higher income tax expense.

Reconciliation of Non-GAAP Financial Measures

Adjusted Net Income

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Net loss from continuing operations

Impairment of goodwill

Equity-based compensation of Karman Topco L.P.

6 unchanged sentences

Amortization of intangible assets (g)

Gain on repurchases of Term Loan Facility and Senior Secured Notes (h)

Gain on repurchases of Term Loan Facility and Notes (h)

Costs associated with the Take 5 Matter (i)

1 unchanged sentence

Adjusted Net Income

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.

Represents expenses related to equity-based compensation expense associated with grants of Common Series D Units of Karman Topco L.P.

made to one of the sponsors of the Company.

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, for the applicable periods.

1 unchanged sentence

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 Voluntary Early Retirement Program and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Restructuring expenses include costs associated with the VERP and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.

2 unchanged sentences

Represents a gain associated with the repurchases of Term Loan Facility and Notes, net of deferred financing fees related to repricing of Term Loan Facility.

For additional information, refer to Note 4—Debt to our unaudited condensed financial statements for the three months ended March 31, 2025 and 2024.

For additional information, refer to Note 4—Debt to our unaudited condensed financial statements for the three and six months ended June 30, 2025 and 2024.

Represents costs associated with collection and remediation activities related to the Take 5 Matter, primarily professional fees and other related costs.

1 unchanged sentence

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) 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 (recovery from) the Take 5 Matter, (xvi) EBITDA for economic interests in investments and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

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 (recovery from) the Take 5 Matter, (xii) EBITDA for economic interests in investments and (xiii) 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 in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details.

These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain noncash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance.

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, our most directly comparable measure presented on a GAAP basis.

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

Continuing Operations

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Depreciation and amortization

Impairment of goodwill

Changes in fair value of warrant liability

1 unchanged sentence

Equity-based compensation of Karman Topco L.P.

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration (c)

Acquisition and divestiture related expenses (d)

1 unchanged sentence

Reorganization expenses (f)

Litigation expenses (g)

Costs associated with the Take 5 Matter (h)

EBITDA for economic interests in investments (i)

Litigation expenses (recovery) (g)

COVID-19 benefits received (h)

Costs associated with the Take 5 Matter (i)

EBITDA for economic interests in investments (j)

Adjusted EBITDA from Continuing Operations

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

Discontinued Operations

(in thousands)

Three Months Ended March 31, 2024

Net income from discontinued operations, net of tax

Interest expense, net

Provision for income taxes from discontinued operations

Depreciation and amortization

Gain on divestitures (k)

Stock-based compensation expense (a)

Fair value adjustments related to contingent consideration related to acquisitions (c)

Divestiture related expenses (d)

Reorganization expenses (f)

EBITDA for economic interests in investments (i)

Adjusted EBITDA from Discontinued Operations

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

Branded Services segment

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

1 unchanged sentence

Depreciation and amortization

Impairment of goodwill

Stock-based compensation expense (a)

Equity-based compensation of Karman Topco L.P.

Fair value adjustments related to contingent consideration related to acquisitions (c)

Fair value adjustments related to contingent consideration (c)

Acquisition and divestiture related expenses (d)

2 unchanged sentences

Litigation expenses (g)

Costs associated with the Take 5 Matter (h)

EBITDA for economic interests in investments (i)

COVID-19 benefits received (h)

Costs associated with the Take 5 Matter (i)

EBITDA for economic interests in investments (j)

Branded Services segment Adjusted EBITDA

Experiential Services segment

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Operating loss

Operating income

Depreciation and amortization

5 unchanged sentences

Litigation expenses (g)

COVID-19 benefits received (h)

Experiential Services segment Adjusted EBITDA

Retailer Services segment

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Operating income (loss)

Operating income

Depreciation and amortization

5 unchanged sentences

Litigation expenses (recovery) (g)

COVID-19 benefits received (h)

Retailer Services segment Adjusted EBITDA

5 unchanged sentences

Restructuring expenses include costs associated with the Voluntary Early Retirement Program and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Restructuring expenses include costs associated with the Voluntary Early Retirement Program (“VERP”) and employee termination benefits associated with a reduction-in-force and other optimization initiatives.

Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs.

Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities.

Represents benefits received from government grants for COVID-19 relief.

Represents costs associated with collection and remediation activities related to the Take 5 Matter, primarily professional fees and other related costs.

1 unchanged sentence

Liquidity and Capital Resources

Our principal sources of liquidity are cash receipts for services performed, borrowings under the Revolving Credit Facility, and other debt.

Our principal sources of liquidity are cash receipts for services performed, and borrowings under the Revolving Credit Facility (as defined below).

Our principal uses of cash are operating expenses, working capital requirements, interest on debt and repayment of debt.

Principal uses of cash used in investing activities includes our enterprise resource planning initiative, which includes upgrading our information system platform.

Our working capital as of June 30, 2025, included $102.9 million of cash and cash equivalents and $673.3 million of accounts receivable, net of allowance for expected credit losses, both of which will be a significant source of ongoing liquidity.

Additionally, as of June 30, 2025, we had the ability to borrow up to $400.0 million under our Revolving Credit Facility after consideration of the borrowing base limitations and outstanding letters of credit.

We expect that internally generated cash and unused availability on our Revolving Credit Facility will be sufficient to support the working capital needs of the Company, the Company’s fixed payments and other obligations on both a short-term and long-term basis.

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

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

Net cash used in operating activities

Net cash (used in) provided by operating activities

Net cash (used in) provided by investing activities

3 unchanged sentences

Net Cash Used in Operating Activities

Net cash used in operating activities from continuing operations during the three months ended March 31, 2025 consisted of net loss of $56.1 million adjusted for certain non-cash items, including gain on repurchases of Notes, net of cost of extinguishments, of $1.6 million, depreciation and amortization of $50.4 million, stock-based compensation of $6.5 million and effects of changes in working capital.

Net cash used in operating activities from continuing operations during the three months ended March 31, 2024 consisted of net loss of $50.1 million adjusted for certain non-cash items, including depreciation and amortization of $49.8 million, stock-based compensation of $8.6 million and effects of changes in working capital.

The change in net cash used in operating activities from continuing operations during the three months ended March 31, 2025 relative to the same period in 2024 was primarily due to an increase in accounts receivable during the three months ended March 31, 2025 as compared to a decrease in accounts receivable during the three months ended March 31, 2024.

Cash flows from operating activities during the six months ended June 30, 2025 decreased $91.8 million, as compared to the same period in 2024 due to increases in accounts receivable, driven primarily by the implementation of our new global enterprise resource planning (“ERP”) system, and an increase in prepaid expenses and other assets due to an increase in prepaid payroll expenses as of June 30, 2025.

Net Cash (Used in) Provided by Investing Activities

Net cash used in investing activities from continuing operations during the three months ended March 31, 2025 primarily consisted of the purchase of property and equipment of $15.1 million, primarily related to our enterprise resource planning initiative, which includes upgrading our information system platform, and the purchase of investments in unconsolidated affiliates of $3.3 million.

Net cash provided by investing activities during the three months ended March 31, 2024 primarily consisted of the purchase of property and equipment of $15.4 million and proceeds from divestitures of $87.4 million.

Net cash used in investing activities from continuing operations during the six months ended June 30, 2025 primarily consisted of purchases of property and equipment of $17.2 million, primarily driven by investments in software to support the enterprise resource planning initiative, and purchases of investments in unconsolidated affiliates of $3.5 million.

Net cash provided by investing activities from continuing operations during the six months ended June 30, 2024 primarily consisted of the proceeds from divestitures of $146.8 million, partially offset by the purchase of property and equipment of $25.1 million and the purchase of investments in unconsolidated affiliates of $10.9 million.

Net Cash Used in Financing Activities

Cash flows used in financing activities from continuing operations during the three months ended March 31, 2025 were primarily related to repurchases of Notes of $18.2 million, repayment of principal on our Term Loan Facility of $3.3 million, payments for taxes related to net share settlement of $0.7 million, payments for taxes related to share settlement under the 2020 Incentive Award Plan and payments related to the share repurchase program of $0.9 million.

Cash flows used in financing activities during the three months ended March 31, 2024 were primarily related to repurchases of the Term Loan Facility of $47.9 million, repayment of principal on our Term Loan Facility of $3.3 million, payments of contingent consideration and holdback payments of $1.9 million, payments for taxes related to net share settlement of $3.3 million, partially offset by $1.2 million related to proceeds from the issuance of Class A common stock.

Description of Credit Facilities

Senior Secured Credit Facilities

Cash flows used in financing activities from continuing operations during the six months ended June 30, 2025 were primarily related to repurchases of Notes and Term Loan Facility debt of $18.2 million, repayment of principal on our Term Loan Facility of $6.6 million and payments for taxes related to net share settlement of $3.6 million.

Cash flows used in financing activities from continuing operations during the six months ended June 30, 2024 were primarily related to repurchases of Notes of $71.7 million, repayment of principal on our Term Loan Facility of $6.6 million, payments of contingent consideration of $7.6 million, payments for taxes related to net share settlement of $11.1 million and payments related to the share repurchase program of $20.8 million.

Credit Facilities

Advantage Sales & Marketing Inc.

(the “Borrower”), our indirect wholly-owned subsidiary, 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., is administrative agent and ABL Collateral Agent.

The Revolving Credit Facility is scheduled to mature in December 2027.

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.

As of March 31, 2025, we had unused capacity under our Revolving Credit Facility available to us of $451.0 million, subject to borrowing base limitations (without giving effect to approximately $51.6 million of outstanding letters of credit and the borrowing base limitations for additional borrowings).

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 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.

Term Loan Facility

The Term Loan Facility is a term loan facility denominated in U.S.

dollars in an aggregate principal amount of $1.1 billion as of March 31, 2025.

Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per annum of the original issued amount of $1.3 billion 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.

Senior Secured Notes

On 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”).

Immediately following such issuance, Finco merged with and into Advantage Sales & Marketing Inc.

(in its capacity as the issuer of the Notes, the “Issuer”), with the Issuer continuing as the surviving entity and assuming the obligations of Finco.

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.

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

The Company voluntarily repurchased an aggregate of $20.0 million principal amount of the Notes during the three months ended March 31, 2025.

recognized a gain on the repurchase of the Notes of $1.8 million for the three months ended March 31, 2025, as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

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.

The Notes will mature on November 15, 2028.

The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S.

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;

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 so long as 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.

As of June 30, 2025, we had unused capacity under our Revolving Credit Facility of $400.0 million, after consideration of the borrowing base limitations and outstanding letters of credit of $53.7 million.

On October 28, 2020, we issued $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”) and may voluntarily prepay loans or reduce commitments under the Notes, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty.

We voluntarily repurchased an aggregate of $20.0 million principal amount of the Notes during the six months ended June 30, 2025 and recognized a gain on the repurchase of $1.8 million, as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

We did not make any voluntary repurchases during the three months ended June 30, 2025.

From time to time, we may repurchase portions of our outstanding indebtedness under the Term Loan Facility and Notes.

Such repurchases, if any, will depend upon prevailing market conditions, our liquidity and capital position, contractual limitations and other factors.

The amounts and timing of any such repurchases will be at our discretion and we are under no obligation to repurchase any specific amount of indebtedness.

Share Repurchases

On November 9, 2021, we announced that our board of directors authorized a share repurchase program (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 by 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.

Future Cash Requirement

1 unchanged sentence

Cash and Cash Equivalents Held Outside the United States

As of March 31, 2025 and December 31, 2024, $67.5 million and $65.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries.

As of March 31, 2025, and December 31, 2024, $25.2 million and $18.5 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 March 31, 2025 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 income.

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.

We consider the majority of the undistributed earnings of our foreign subsidiaries, as of March 31, 2025, to be indefinitely reinvested and, accordingly, no provision has been made for taxes in excess of the $0.6 million noted above.

As of June 30, 2025 and December 31, 2024, $26.8 million and $65.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries.

As of June 30, 2025, and December 31, 2024, $29.4 million and $18.5 million, respectively, of our cash and cash equivalents were held by foreign branches.

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.

Nonetheless, we assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and branches and recorded a deferred tax liability of approximately $0.8 million of withholding tax as of June 30, 2025 for unremitted earnings in Canada repatriated to the U.S.

in the second quarter of fiscal year 2025.

We continue to assert indefinite reinvestment on earnings of our foreign operations, other than Canada although we may change our assertion if we identify a higher return on this capital in the U.S.

and we are able to repatriate the income in a tax-efficient means.

Off-Balance Sheet Arrangements

3 unchanged sentences

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are included in our 2024 Annual Report and did not materially change during the three months ended March 31, 2025.

Our critical accounting policies and estimates are included in our 2024 Annual Report and did not materially change during the six months ended June 30, 2025.

Recently Issued Accounting Pronouncements

3 unchanged sentences

The standard is effective for our annual report for fiscal year 2025.

The new standard is expected to be applied prospectively,

but retrospective application is permitted.

The new standard is expected to be applied prospectively, but retrospective application is permitted.

We are currently evaluating the impact of ASU 2023-09 on the consolidated financial statements and related disclosures.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis