What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-17 · 247 added, 179 removed, 355 unchanged (55% of the section changed)

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sales and marketing.

Through our sales segment, which generated approximately 67.5% and 57.7% of our total revenues in the three months ended March 31, 2021 and 2020, respectively, we offer headquarter sales representation services to consumer goods manufacturers, for whom we prepare and present to retailers a business case to increase distribution of manufacturers’ products and optimize how they are displayed, priced and promoted.

Through our sales segment, which generated approximately 66.8% and 63.6% of our total revenues in the six months ended June 30, 2021 and 2020, respectively, we offer headquarter sales representation services to consumer goods manufacturers, for whom we prepare and present to retailers a business case to increase distribution of manufacturers’ products and optimize how they are displayed, priced and promoted.

We also make in-store

merchandising visits for both manufacturer and retailer clients to ensure the products we represent are adequately stocked and properly displayed.

Through our marketing segment, which generated approximately 32.5% and 42.3% of our total revenues in the three months ended March 31, 2021 and 2020, respectively, we help brands and retailers reach consumers through two main categories within the marketing segment.

The first and largest is our retail experiential business, also known as in-store sampling

or demonstrations, where we create manage highly customized large-scale sampling programs (both in-store and

online) for leading retailers.

The second business is our collection of specialized agency businesses, in which we provide private label services to retailers and develop granular marketing programs for brands and retailers through our shopper, consumer and digital marketing agencies.

Through our marketing segment, which generated approximately 33.2% and 36.4% of our total revenues in the six months ended June 30, 2021 and 2020, respectively, we help brands and retailers reach consumers through two main categories within the marketing segment.

The first and largest category is our retail experiential business, also known as in-store

sampling or demonstrations, where we manage highly customized large-scale sampling programs (both in-store

and online) for leading retailers.

The second category is our collection of specialized agency services, in which we provide private label services to retailers and develop granular marketing programs for brands and retailers through our shopper, consumer and digital marketing agencies.

Business Combination with Conyers Park

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(“ASI”), entered into an agreement and plan of merger (as amended, modified, supplemented or waived, the “Merger Agreement”), with Conyers Park II Acquisition Corp., a Delaware corporation now known as Advantage Solutions Inc.

(“Conyers Park”), CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Topco.

In September 2020 and in connection with its entry into the Merger Agreement, Conyers Park entered into subscription agreements (collectively, the “Subscription Agreements”) pursuant to which certain investors, including participating equityholders of Topco (the “Advantage Sponsors”), agreed to purchase Class A Common Stock of Conyers Park (“Common Stock”) at a purchase price of $10.00 per share (the “PIPE Investment”).

(“Conyers Park”), CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), and Karman Topco L.P., then the parent company of ASI (“Topco”).

In September 2020 and in connection with its entry into the Merger Agreement, Conyers Park entered into subscription agreements (collectively, the “Subscription Agreements”) pursuant to which certain investors, including participating equity holders of Topco (the “Advantage Sponsors”), agreed to purchase Class A Common Stock of Conyers Park (“Common Stock”) at a purchase price of $10.00 per share (the “PIPE Investment”).

On October 27, 2020, Conyers Park held a special meeting of stockholders (the “Special Meeting”), at which the Conyers Park stockholders considered and adopted, among other matters, a proposal to approve the business combination, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements.

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Of the 85,540,000 shares of Common Stock, the Advantage Sponsors acquired 34,410,000 shares of Common Stock, and other purchasers acquired 51,130,000 shares of Common Stock.

Holders of 32,114,818 shares of Common Stock sold in its initial public offering properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from Conyers Park’s initial public offering, calculated as of two business days prior to the consummation of the business combination, $10.06 per share, or $323.1 million in the aggregate (collectively, the “Redemptions”).

As a result of the Merger, among other things, pursuant to the Merger Agreement, Conyers Park issued to Topco, as sole stockholder of ASI prior to the Merger, aggregate consideration equal to (a) 203,750,000 shares of Common Stock, and (b) 5,000,000 shares of Common Stock that vested upon achievement of a market performance condition on January 15, 2021.

After giving effect to the Transactions, the Redemptions, and the consummation of the PIPE Investment, there were 313,425,182 shares of Common Stock issued and outstanding as of the Closing Date, excluding the 5,000,000 shares of Common Stock subject to the market performance condition.

Holders of 32,114,818 shares of Common Stock sold in Conyers Park’s initial public offering properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds therefrom, calculated as of two business days prior to the Closing Date, equal to $10.06 per share, or $323.1 million in the aggregate (collectively, the “Redemptions”).

The Common Stock and outstanding warrants of Conyers Park (renamed “Advantage Solutions Inc.” following the Transactions) commenced trading on the Nasdaq Global Select Market under the symbols “ADV” and “ADVWW”, respectively, on October 29, 2020.

As noted above, an aggregate of $323.1 million was paid from the Conyers Park’s trust account to holders in connection with the Redemption, and the remaining balance immediately prior to the closing of the Transactions of approximately $131.2 million remained in the trust account.

As noted above, an aggregate of $323.1 million was paid from the Conyers Park’s trust account to holders in connection with the Redemptions, and the remaining balance immediately prior to the closing of the Transactions of approximately $131.2 million remained in the trust account.

The remaining amount in the trust account was used to fund the Transactions, including the entry into the New Senior Secured Credit Facilities (as defined below).

In connection with the Merger, ASI repaid and terminated $3.3 billion of debt arrangements under its First Lien Credit Agreement, Second Lien Credit Agreement, and accounts receivable securitization facility (the “AR Facility”) that existed in 2020 (collectively, the “Credit Facilities”) with incremental costs of $86.8 million.

This amount was repaid by ASI through a combination of (i) cash on hand, (ii) proceeds from certain private investments in Common Stock, (iii) the entry by Advantage Sales & Marketing Inc., a wholly owned subsidiary of ASI, into (a) a new senior secured asset-based revolving credit facility, which permits borrowing in an aggregate principal amount of up to $400.0 million, subject to borrowing base capacity (the “New Revolving Credit Facility”), of which $100.0 million of principal amount was borrowed as of October 28, 2020, and (b) a new secured first lien term loan credit facility in an aggregate principal amount of $1.325 billion (the “New Term Loan Facility” and, together with the New Revolving Credit Facility, the “New Senior Secured Credit Facilities”), and (iv) the issuance by Advantage Solutions FinCo LLC, a direct subsidiary of Advantage Sales & Marketing Inc., of $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”).

In connection with the Merger, ASI repaid and terminated $3.3 billion of debt arrangements under its First Lien Credit Agreement, Second Lien Credit Agreement, and accounts receivable securitization facility (the “AR Facility”) that existed in 2020 (collectively, the “Prior Credit Facilities”) with incremental costs of $86.8 million.

(“Finco”), of $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”).

The Merger was accounted for as a reverse recapitalization in accordance with GAAP.

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Impacts of the COVID-19 Pandemic

The COVID-19 pandemic has

had, and is likely to continue to have, a severe and unprecedented impact on the world.

Measures to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face events, “shelter in

place” health orders and travel restrictions have had a significant effect on certain of our business operations.

pandemic has had, and is likely to continue to have, a severe and unprecedented impact on the world.

Measures to prevent its spread, including government-imposed restrictions on large gatherings, closures of face-to-face

events, “shelter in place” health orders and travel restrictions have had a significant effect on certain of our business operations.

In response to these business disruptions, we have taken several actions including reducing certain of our discretionary expenditures, eliminating non-essential

travel, terminating or amending certain office leases, furloughing, instituting pay reductions and deferrals and terminating some of our employees, particularly with respect to COVID-19 impacted operations.

These measures to prevent the spread of COVID-19 have adversely

impacted certain areas of our business operations, including our in-store

sampling, foodservice and European businesses.

Most notably, we temporarily suspended all in-store sampling in

travel, terminating or amending certain office leases, furloughing, instituting pay reductions and deferrals and terminating some of our employees, particularly with respect to COVID-19

impacted operations.

These measures to prevent the spread of COVID-19

have adversely impacted certain areas of our business operations, including our in-store

sampling, foodservice and international businesses.

Most notably, we temporarily suspended all in-store

sampling in all U.S.

locations starting in March and April of 2020 as well as in certain international locations.

More recently, we have started to re-open

sampling activities in certain retailers in certain geographies on a prudent, phased basis.

While the restrictions relating to in-store

sampling services have materially and adversely affected our results of operations during the year ended December 31, 2020 and three months ended March 31, 2021, we have been successful in growing other adjacent services in our experiential marketing business such as online grocery pick-up

sampling services materially and adversely affected our results of operations during the year ended December 31, 2020 and the six months ended June 30, 2021, we have started to re-open

sampling activities in certain retailers in certain geographies on a prudent, phased basis, and we have been successful in growing other adjacent services in our experiential marketing business such as online grocery pick-up

sampling and virtual product demonstrations, both of which have seen increased adoption and demand.

Our foodservice business continues to be negatively impacted by lower away-from-home demand resulting from the impact of the COVID-19 pandemic

on various channels, including restaurants, education and travel and lodging.

Our European business continues to be negatively impacted by activity restrictions implemented in the various European geographies in which we operate.

We have also experienced a positive impact in our headquarter sales and private label services where, due to the large increase in consumer purchases at retail to support incremental at-home consumption, our

operations have experienced a favorable increase in volume and demand.

Additionally, our e-commerce services have

benefited due to the increase in consumer purchasing with online retailers.

These differing impacts are reflected in our financial results for the three months ended March 31, 2021, which show that compared to the three months ended March 31, 2020:

While not back to pre-pandemic

levels, more recently, we have seen growth in our foodservice business, which was impacted by lower away-from-home demand on various channels, including restaurants, education and travel and lodging.

Additionally, our international business has started to show growth after restrictions were lifted on activity in the various international geographies in which we operate.

During the year ended December 31, 2020 and the six months ended June 30, 2021, we experienced a positive impact in our headquarter sales and private label services where, due to the large increase in consumer purchases at retail to support incremental at-home

consumption, our operations have experienced a favorable increase in volume and demand.

Additionally, our e-commerce

services have benefited due to the increase in consumer purchasing with online retailers.

These differing impacts are reflected in our financial results for the six months ended June 30, 2021, which show that compared to the six months ended June 30, 2020:

our sales segment revenues, operating income, and Adjusted EBITDA increased 13.2%, 126.7%, and 3.0%, respectively, and;

our market segment revenues, operating income and Adjusted EBITDA decreased 30.9%, 66.3% and 1.6%, respectively.

We expect the ultimate significance of the impact of the pandemic on our financial condition, results of operations and cash flows will be dictated by the length of time that such circumstances continue, which will depend on the currently unknowable extent and duration of the COVID-19

our market segment revenues and operating income decreased 1.4% and 105.6%, respectively, and Adjusted EBITDA increased 20.0%.

We expect the ultimate significance of the impact of the pandemic on our financial condition, results of operations and cash flows will be dictated by the length of time that such circumstances continue and any future restrictions imposed on our business and operations, which will depend on the currently unknowable extent and duration of the COVID-19

pandemic and the nature and effectiveness of governmental, commercial and personal actions taken in response.

We expect the COVID-19

pandemic will continue to impact our various businesses through at least the first half of 2021;

however, we do believe the impact will decrease in the second half of 2021 as businesses and individuals choose to have more in-person

Our financial performance for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 includes:

revenues decreasing by $88.4 million, or 10.0%, to $791.0 million;

We believe the impact of the pandemic will decrease in the second half of 2021 as businesses and individuals choose to have more in-person

Our financial performance for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 includes:

revenues increasing by $208.4 million, or 32.5%, to $849.9 million;

operating income increasing from zero to $42.4 million;

net income increasing by $43.6 million, or 115.2%, to $5.8 million;

Adjusted Net Income increasing by $2.6 million, or 6.7%, to $41.4 million;

Adjusted EBITDA increasing by $9.9 million, or 8.9%, to $121.9 million.

Our financial performance for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 includes:

revenues increasing by $120.0 million, or 7.9%, to $1,640.9 million;

operating income increasing by $48.6 million, or 154.6%, to $42.4 million;

net loss decreasing by $21.2 million, or 97.5%, to $0.5 million;

net income increasing by $63.2 million, or 106.2%, to $5.2 million;

Adjusted Net Income increasing by $22.0 million, or 33.5%, to $87.7 million;

Adjusted EBITDA increasing by $15.0 million, or 6.9%, to $233.4 million.

We acquired two businesses during the three months ended March 31, 2021, which were two sales agencies.

The aggregate purchase price for these two acquisitions was $18.1 million, of which $14.0 million was paid in cash, $2.7 million in contingent consideration and $1.4 million in holdbacks.

During the six months ended June 30, 2021, we acquired three sales businesses.

The aggregate purchase price for these three acquisitions was $27.0 million, of which $20.4 million was paid in cash, $5.1 million in contingent consideration and $1.4 million in holdback.

Factors Affecting Our Business and Financial Reporting

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We have grown and expect to continue to grow our business in part by acquiring quality businesses, both domestic and international.

In December 2017, we completed the Daymon Acquisition, a leading provider of retailer-centric services, including private label development and management, merchandising and experiential marketing services.

In addition to the Daymon Acquisition, we have completed 65 acquisitions from January 2014 to March 31, 2021, ranging in purchase prices from approximately $0.3 million to $98.5 million.

In December 2017, we completed the acquisition of Daymon Worldwide Inc., a leading provider of private label development and management, merchandising and experiential marketing services.

In addition to the Daymon acquisition, we have completed 66 acquisitions from January 2014 to June 30, 2021, ranging in purchase prices from approximately $0.3 million to $98.5 million.

Many of our acquisition agreements include contingent consideration arrangements, which are described below.

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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.

Changes in the estimated fair value of contingent consideration liabilities related to the time component of the present value calculation are reported in “Interest expense, net.” Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Loss.

Changes in the estimated fair value of contingent consideration liabilities related to the time component of the present value calculation are reported in “Interest expense, net.” Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in “Selling, general and administrative expenses” in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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 income (loss) and net loss.

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 intangibles 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 intangibles, such as client relationships and trade names, that comprise the majority of the finite-lived intangibles that create our amortization expense.

We do not believe the amortization expense associated with the intangibles 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 intangibles, such as client relationships and trade names, that comprise the majority of the finite-lived intangibles that create our amortization expense.

Foreign Exchange Fluctuations.

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Revenues related to our sales segment are primarily comprised of commissions, fee-for-service

and cost-plus fees for providing retail services, category and space management, headquarter relationship management, technology solutions and administrative services.

and cost-plus fees for providing retail merchandising services, category and space management, headquarter relationship management, technology solutions and administrative services.

A small portion of our arrangements include performance incentive provisions, which allow us to earn additional revenues on our performance relative to specified quantitative or qualitative goals.

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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 earn-out

In general, when we acquire a business, the acquisition includes a contingent consideration arrangement (e.g., an earn-out

provision) and, accordingly, we separately track the financial performance of the acquired business.

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For example, if we completed an acquisition on July 1, 2019 for a business that included a contingent consideration arrangement, we would consider revenues from the acquired business from July 1, 2019 to June 30, 2020 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.

In limited cases, when the 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.

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.

actually generated during the 12 months after its acquisition to be organic.

For example, if we completed an acquisition on July 1, 2020 for a business that did not include a contingent consideration arrangement, we would consider the amount of revenues from the acquired business from July 1, 2019 to June 30, 2020 to be acquired revenues during the period from July 1, 2020 to June 30, 2021, with any differences from that amount actually generated during the latter period to be organic revenues.

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We also expect to incur additional expenses as a result of 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 professional services.

Other Expenses

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 and based on the input assumptions used in the Black-Scholes option pricing model, including our stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding, which may vary from period to period.

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 and based on the input assumptions used in the Black-Scholes option pricing model, including our stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding, which may vary from period to period.

We believe these amounts are not correlated to future business operations.

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intangible asset impairment charge of $580.0 million during the year ended December 31, 2018, related to our sales trade name resulting from the 2014 Topco Acquisition considered to be indefinite lived.

The impairment charge has been reflected in “Impairment of goodwill and indefinite-lived assets” in our Consolidated Statements of Operations and Comprehensive Loss, in addition to a $652.0 million non-cash goodwill impairment

charge in the sales reporting unit.

The impairment charge has been reflected in “Impairment of goodwill and indefinite-lived assets” in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), in addition to a $652.0 million non-cash

goodwill impairment charge in the sales reporting unit.

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, 2021.

Income tax (benefit) expense and our effective tax rates can be affected by many factors, including state apportionment factors, our acquisition 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.

Depreciation expense relates to the property and equipment that we own, which represented less than 1% of our total assets at June 30, 2021.

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.

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Adjusted Net Income

Adjusted Net Income is a non-GAAP financial

Adjusted Net Income means net loss before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity based compensation of Topco and Advantage Sponsors’ management fee, (iv) changes in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net

of benefits received, (viii) EBITDA for economic interests in investments, (ix) restructuring expenses, (x) litigation expenses, (xi) (Recovery from) loss on Take 5, (xii) deferred financing fees, (xiii) costs associated with the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance and (xv) related tax adjustments.

Adjusted Net Income is a non-GAAP

financial measure.

Adjusted Net Income means net income (loss) before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity based compensation of Topco and Advantage Sponsors’ management fee, (iv) changes in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19,

net of benefits received, (viii) EBITDA for economic interests in investments, (ix) restructuring expenses, (x) litigation expenses, (xi) (Recovery from) loss on Take 5, (xii) deferred financing fees, (xiii) costs associated with the Take 5 Matter, (xiv) other adjustments that management believes are helpful in evaluating our operating performance and (xv) 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, our most directly comparable measure presented on a GAAP basis.

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

Adjusted EBITDA and Adjusted EBITDA by Segment

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP financial

measures of our operating performance.

Adjusted EBITDA means net loss before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Topco and Advantage Sponsors’ management fee, (vii) changes in fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net

of benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation expenses, (xv) (Recovery from) loss on Take 5, (xvi) costs associated with the Take 5 Matter and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP

financial measures of our operating performance.

Adjusted EBITDA means net income (loss) before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Topco and Advantage Sponsors’ management fee, (vii) changes in fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19,

net of benefits received, (xii) EBITDA for economic interests in investments, (xiii) restructuring expenses, (xiv) litigation expenses, (xv) (Recovery from) loss on Take 5, (xvi) costs associated with the Take 5 Matter and (xvii) other adjustments that management believes are helpful in evaluating our operating performance.

We present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance.

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

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for net loss, for our most directly comparable measure presented on a GAAP basis.

Results of Operations for the Three Months Ended March 31, 2021 and 2020

The following table sets forth items derived from the Company’s consolidated statements of operations for the three months ended March 31, 2021 and 2020 in dollars and as a percentage of total revenues.

Three Months Ended March 31,

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for net income (loss), for our most directly comparable measure presented on a GAAP basis.

Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020

The following table sets forth items derived from the Company’s consolidated statements of operations for the three and six months ended June 30, 2021 and 2020 in dollars and as a percentage of total revenues.

Three Months Ended June 30,

Six Months Ended June 30,

(amounts in thousands)

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Selling, general, and administrative expenses

Recovery from Take 5

Depreciation and amortization

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Operating income

Other expenses:

Other (income) expenses:

Change in fair value of warrant liability

Interest expense, net

Total other expenses

Loss before income taxes

Provision for income taxes

Total other (income) expenses

Income (loss) before income taxes

Provision for (benefit from) income taxes

Net income (loss)

Other Financial Data

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Adjusted Net Income and Adjusted EBITDA is a financial measure that is not calculated in accordance with GAAP.

For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA and reconciliations of net loss to Adjusted Net Income and Adjusted EBITDA, see “ —Non-GAAP

For a discussion of our presentation of Adjusted Net Income and Adjusted EBITDA and reconciliations of net income (loss) to Adjusted Net Income and Adjusted EBITDA, see “ —Non-GAAP

Financial Measures

Comparison of the Three Months Ended March 31, 2021 and 2020

Three Months Ended

Comparison of the Three Months Ended June 30, 2021 and 2020

Three Months Ended June 30,

(amounts in thousands)

Total revenues

Total revenues decreased by $88.4 million, or 10.0%, during the three months ended March 31, 2021, as compared to the three months ended March 31, 2020.

The sales segment revenues increased $26.5 million, of which $2.4 million were revenues from acquired businesses during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020.

Excluding revenues from acquired businesses, the sales segment experienced an increase of $24.1 million in organic revenues primarily due to growth in our headquarter sales and retail services where we benefitted from several new clients and an increase in eat-at-home

Total revenues increased by $208.4 million, or 32.5%, during the three months ended June 30, 2021, as compared to the three months ended June 30, 2020.

The sales segment revenues increased $101.4 million, of which $3.7 million were revenues from acquired businesses during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020.

Excluding revenues from acquired businesses and favorable foreign exchange rates of $10.4 million, the segment experienced an increase of $87.3 million in organic revenues primarily due to growth in our retail merchandising services where we benefitted from expansions with existing and new clients and our international and foodservice businesses which experienced recoveries from temporary reductions as a result of the COVID-19

The growth was offset by reduction in our headquarter sales where, due to the large increase in consumer purchases at retail to support incremental at-home

consumption, our operations had experienced a favorable increase in volume and demand in the prior year.

The marketing segment revenues increased $107.0 million during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, which includes revenues of $3.1 million from acquired businesses.

Excluding revenues from acquired businesses and favorable foreign exchange rates of $2.1 million, the segment experienced an increase of $101.8 million in organic revenues.

The increase in revenues was primarily due to an increase in our in-store

sampling services from gradually lifting temporary suspensions as a result of recovery from the COVID-19

pandemic and continued growth in our digital marketing services.

Cost of Revenues

Cost of revenues as a percentage of revenues for the three months ended June 30, 2021 was 82.1%, as compared to 79.5% for the three months ended June 30, 2020.

The increase as a percentage of revenues was largely attributable to the change in the revenue mix of our services as a result of recoveries from the COVID-19

pandemic and investment to stand up associates on behalf of clients to restart services which were dormant during COVID-19.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of revenues for the three months ended June 30, 2021 was 5.5%, as compared to 12.6% for the three months ended June 30, 2020.

The decrease as a percentage of revenues for the three months ended June 30, 2021 was primarily attributable to $39.6 million decrease in restructuring charges primarily associated with terminating certain office leases, $2.1 million decrease in acquisition-related expenses, partially offset by $9.0 million increase in stock-based compensation expense related to issuance of performance restricted stock units (“PSUs”) and restricted stock units (“RSUs”) with respect to our Class A common stock under the Advantage Solutions Inc.

2020 Incentive Award Plan (the “2020 Plan”).

Depreciation and Amortization Expense

Depreciation and amortization expense increased $3.9 million, or 6.7%, to $62.7 million for the three months ended June 30, 2021, from $58.7 million for the three months June 30, 2020.

The increase is primarily due to increase in depreciation expenses from our internally developed software and additional amortization of intangibles assets from acquisitions.

Operating Income

Three Months Ended June 30,

(amounts in thousands)

Total operating income

Not meaningful

In the sales segment, the increase in operating income during the three months ended June 30, 2021 was primarily attributable to growth in revenues as described above together with the decrease in restructuring charges primarily associated with terminating certain office leases and the change in fair value adjustments related to contingent consideration.

In the marketing segment, the increase in operating income during the three months ended June 30, 2021 was primarily attributable to the decrease in restructuring charges primarily associated with terminating certain office leases, partially offset by the change in fair value adjustments related to contingent consideration and recovery from Take 5 as described above.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents $7.1 million of non-cash

gain resulting from a fair value adjustment to warrant liability with respect to the private placement warrants for the three months ended June 30, 2021.

Fair value adjustments are based on the input assumptions used in the Black-Scholes option pricing model, including our Class A common stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding, which may vary from period to period.

Interest Expense, net

Interest expense decreased $14.3 million, or 27.8%, to $37.2 million for the three months ended June 30, 2021, from $51.5 million for the three months ended June 30, 2020.

The decrease in interest expense, net was primarily due to the decrease in total debt as a result of the Transactions.

Provision for (benefit from) Income Taxes

Provision for income taxes was $6.6 million for the three months ended June 30, 2021 as compared to a benefit from income taxes of $13.7 million for the three months ended June 30, 2020.

The fluctuation was primarily attributable to the greater pre-tax

income, unfavorable permanent book/tax differences related to officers’ compensation including stock based awards and discrete items recorded for the three months ended June 30, 2021 related to the remeasurement of deferred tax liabilities in the UK and US state jurisdictions due to income tax rate changes.

Net income was $5.8 million for the three months ended June 30, 2021, compared to net loss of $37.8 million for the three months ended June 30, 2020.

The increase in net income was primarily driven by the increase in operating income and decrease in interest expense as a result of the consummation of the Transactions and the fair value adjustment of warrant liability partially offset by unfavorable variance associated with the provision for income taxes as described above.

Adjusted Net Income

The increase in Adjusted Net Income for the three months ended June 30, 2021 was attributable to the decrease in interest expense as a result of the consummation of the Transactions and increase in provision for income taxes.

For a reconciliation of Adjusted Net Income to Net income (loss), see “ — Non-GAAP

Financial Measures.”

Adjusted EBITDA and Adjusted EBITDA by Segment

Three Months Ended June 30,

(amounts in thousands)

Total Adjusted EBITDA

Adjusted EBITDA increased $9.9 million, or 8.9 %, to $122.0 million for the three months ended June 30, 2021, from $112.0 million for the three months ended June 30, 2020.

The increase in Adjusted EBITDA was primarily attributable to the growth in revenues as described above.

For a reconciliation of Adjusted EBITDA to net income, see “— Non-GAAP

Financial Measures

Comparison of the Six Months Ended June 30, 2021 and 2020

Six Months Ended June 30,

(amounts in thousands)

Total revenues

Total revenues increased by $120.0 million, or 7.9%, during the six months ended June 30, 2021, as compared to the six months ended June 30, 2020.

The sales segment revenues increased $127.9 million, of which $6.1 million were revenues from acquired businesses during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020.

Excluding revenues from acquired businesses and favorable foreign exchange rates of $17.1 million, the segment experienced an increase of $104.7 million in organic revenues primarily due to growth in our headquarter and retail merchandising services where we benefitted from expansions with existing and new clients and an increase in eat-at-home

consumption due to the COVID-19

pandemic, as well as expansion in our e-commerce

These increases were partially offset by weakness in both our foodservice and our European businesses due to the temporary closures affecting those industries and locations and other adverse impacts of the COVID-19

pandemic has had on these services.

The marketing segment revenues declined $114.9 million, of which $3.9 million were revenues from acquired businesses during the three months ended March 31, 2021 as compared to the three months ended March 31, 2020.

Excluding revenues from acquired businesses, the segment experienced a decline of $118.8 million in organic revenues.

The decrease in revenues were primarily due to temporary suspensions or reductions of certain in-store

pandemic, expansion in our e-commerce

services, and our European businesses which experienced recoveries from temporary reductions as a result of the COVID-19

The marketing segment revenues declined $7.9 million during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, which includes revenues of $7.0 million from acquired businesses.

Excluding revenues from acquired businesses and favorable foreign exchange rates of $4.2 million, the segment experienced a decline of $19.1 million in organic revenues.

The slight decrease in revenues was primarily due to the gradual lifting of temporary suspensions or reductions of certain in-store

sampling services as a result of the COVID-19

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Cost of Revenues

Cost of revenues as a percentage of revenues for the three months ended March 31, 2021 was 82.6%, as compared to 84.9 % for the three months ended March 31, 2020.

The decrease as a percentage of revenues was largely attributable to the change in the revenue mix of our services as a result of the COVID-19 pandemic

including the temporary suspension or reduction of certain in-store sampling services

and reduced travel-related expenses.

Cost of revenues as a percentage of revenues for the six months ended June 30, 2021 was 82.4%, as compared to 82.6% for the six months ended June 30, 2020, which is consistent year over year.

Selling, General and Administrative Expenses

Selling, general and administrative expenses as a percentage of revenues for three months ended March 31, 2021 was 5.1%, as compared to 4.7% for the three months ended March 31, 2020.

The increase as a percentage of revenues for the three months ended March 31, 2021 was primarily attributable to an increase in stock-based compensation expense related to issuance of performance restricted stock units (“PSUs”), restricted stock units (“RSUs”), and stock options with respect to our Class A common stock under the Advantage Solutions Inc.

2020 Incentive Award Plan (the “2020 Plan”).

The Company recognized non-cash compensation

expenses of $8.7 million in connection with the 2020 Plan for the three months ended March 31, 2021.

Selling, general and administrative expenses as a percentage of revenues for the six months ended June 30, 2021 was 5.3%, as compared to 8.0% for the six months ended June 30, 2020.

The decrease as a percentage of revenues for the six months ended June 30, 2021 was primarily attributable to $36.6 million decrease in restructuring charges primarily associated with terminating certain office leases, $12.5 million decrease in equity-based compensation expense associated with our Common Series D Units, and $5.7 million of the change in fair value adjustments related to contingent consideration, partially offset by $17.6 million of stock-based compensation expense related to issuance of PSUs and RSUs with respect to our Class A common stock under the 2020 Plan.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased $0.6 million, or 1.0%, to $59.6 million for the three months ended March 31, 2021, from $60.2 million for the three months March 31, 2020.

Beginning in mid-March of 2020,

in response to the COVID-19 pandemic, the

Company established a global work from home policy.

A significant portion of the Company’s office-based workforce temporarily transitioned to working from home and the Company commenced a plan to strategically exit certain offices.

As a result, the reduction to the leasehold improvements related to these leases resulted in the decrease in the amortization expenses during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

Depreciation and amortization expense increased $3.3 million, or 2.8%, to $122.3 million for the six months ended June 30, 2021, from $119.0 million for the six months June 30, 2020.

The increase is primarily due to additional amortization expenses of intangibles from acquisitions.

Operating Income

Three Months Ended

Six Months Ended June 30,

(amounts in thousands)

Total operating income

In the sales segment, the increase in operating income during the three months ended March 31, 2021 was primarily attributable to the growth in revenues in the sales segment as described above.

In the marketing segment, the decrease in operating income during the three months ended March 31, 2021 was primarily attributable to the decrease in revenues as described above.

In the sales segment, the increase in operating income during the six months ended June 30, 2021 was primarily attributable to growth in revenues as described above together with our cost saving initiatives in response to COVID-19

In the marketing segment, the increase in operating income during the six months ended June 30, 2021 was primarily attributable to growth in revenues and the cost saving initiatives in response to COVID-19

pandemic, partially offset by recovery from Take 5 as described above.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability represents $1.5 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, 2021.

gain resulting from a fair value adjustment to warrant liability with respect to the private placement warrants for the six months ended June 30, 2021.

Fair value adjustment are based on the input assumptions used in the Black-Scholes option pricing model, including our Class A common stock price at the end of the reporting period, the implied volatility or other inputs to the model and the number of private placement warrants outstanding, which may vary from period to period.

Interest Expense, net

Interest expense, net decreased $20.9 million, or 40.4%, to $30.9 million for the three months ended March 31, 2021, from $51.8 million for the three months ended March 31, 2020.

Interest expense decreased $35.3 million, or 34.1%, to $68.1 million for the six months ended June 30, 2021, from $103.3 million for the six months ended June 30, 2020.

The decrease in interest expense, net was primarily due to the decrease in total debt as a result of the Transactions.

Provision for Income Taxes

Provision for income taxes was $1.7 million for the three months ended March 31, 2021 as compared to a provision for income taxes of $1.4 million for the three months ended March 31, 2020.

The fluctuation was primarily attributable to the greater pre-tax income,

unfavorable permanent book/tax differences related to officers’ compensation, fair value adjustments for warrant liabilities, and valuation allowance for the Company’s Mexico operations recorded for the three months ended March 31, 2021.

Net loss was $0.5 million for the three months ended March 31, 2021, compared to net loss of $21.7 million for the three months ended March 31, 2020.

The decrease in net loss was primarily driven by the increase in operating income and decrease in interest expense as a result of the consummation of the Transactions partially offset by the fair value adjustment of warrant liability and unfavorability associated with the provision for income taxes as described above.

Provision for (benefit from) Income Taxes

Provision for income taxes was $8.3 million for the six months ended June 30, 2021 as compared to a benefit from income taxes of $12.3 million for the six months ended June 30, 2020.

The fluctuation was primarily attributable to the greater pre-tax

income, unfavorable permanent differences related to officers’ compensation including stock based awards and discrete items recorded for the six months ended June 30, 2021 related to valuation allowance for the Company’s Mexico operations and the remeasurement of deferred tax liabilities in the UK and US state jurisdictions due to income tax rate changes.

Net income was $5.2 million for the six months ended June 30, 2021, compared to net loss of $59.5 million for the six months ended June 30, 2020.

The increase in net income was primarily driven by the increase in operating income and decrease in interest expense as a result of the consummation of the Transactions partially offset by unfavorable variances associated with the provision for income taxes as described above.

Adjusted Net Income

The increase in Adjusted Net Income for the three months ended March 31, 2021 was attributable to the decrease in interest expense as a result of the consummation of the Transactions offset by the decline in the marketing segment related to the temporary suspension or reductions of in-store sampling

programs during the pandemic and increase in provision for income taxes.

For a reconciliation of Adjusted Net Income to Net loss, see “ —Non-GAAP

The increase in Adjusted Net Income for the six months ended June 30, 2021 was attributable to the decrease in interest expense as a result of the consummation of the Transactions and increase in provision for income taxes.

For a reconciliation of Adjusted Net Income to Net income (loss), see “— Non-GAAP

Financial Measures.”

Adjusted EBITDA and Adjusted EBITDA by Segment

Three Months Ended

Six Months Ended June 30,

(amounts in thousands)

Total Adjusted EBITDA

Adjusted EBITDA increased $5.1 million, or 4.8 %, to $111.4 million for the three months ended March 31, 2021, from $106.4 million for the three months ended March 31, 2020.

The increase in Adjusted EBITDA was primarily attributable to the growth in revenues in the sales segment with favorable margin contributions from our headquarter sales services as described above.

Adjusted EBITDA increased $15.0 million, or 6.9 %, to $233.4 million for the six months ended June 30, 2021, from $218.4.0 million for the six months ended June 30, 2020.

The increase in Adjusted EBITDA was primarily attributable to the growth in revenues as described above.

For a reconciliation of Adjusted EBITDA to net income, see “— Non-GAAP

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Non-GAAP Financial

Adjusted Net Income is a non-GAAP financial

Adjusted Net Income means net loss before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity based compensation of Topco and Advantage Sponsors’ management fee, (iv) change in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net

Adjusted Net Income is a non-GAAP

financial measure.

Adjusted Net Income means net income (loss) before (i) impairment of goodwill and indefinite-lived assets, (ii) amortization of intangible assets, (iii) equity based compensation of Topco and Advantage Sponsors’ management fee, (iv) change in fair value of warrant liability, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19,

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

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

Three Months Ended

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

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

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Net income (loss)

Net loss attributable to noncontrolling interest

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net of benefits received (h)

Recovery from Take 5

Costs associated with the Take 5 Matter (i)

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Adjusted Net Income

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP financial

measures of our operating performance.

Adjusted EBITDA means net loss before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Topco and Advantage Sponsors’ management fee, (vii) change in fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19, net

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental non-GAAP

financial measures of our operating performance.

Adjusted EBITDA means net income (loss) before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) equity based compensation of Topco and Advantage Sponsors’ management fee, (vii) change in fair value of warrant liability, (viii) stock-based compensation expense, (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition-related expenses, (xi) costs associated with COVID-19,

We present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance.

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

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for our Net loss, our most directly comparable measure presented on a GAAP basis.

Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for our Net income (loss), our most directly comparable measure presented on a GAAP basis.

A reconciliation of Adjusted EBITDA to Net income (loss) is provided in the following table:

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Net income (loss)

Interest expense, net

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net of benefits received (h)

Recovery from Take 5

Costs associated with the Take 5 Matter (i)

2 unchanged sentences

Sales Segment

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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Marketing Segment

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Operating income

Operating (loss) income

Depreciation and amortization

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net of benefits received (h)

Recovery from Take 5

Costs associated with the Take 5 Matter (i)

Marketing Segment Adjusted EBITDA

Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (or certain of the management companies associated with it or its advisors) pursuant to a management services agreement in the three months ended March 31, 2021 and 2020.

Also represents expenses related to (i) equity-based compensation expense associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors, (ii) equity-based compensation expense associated with the Common Series C Units of Topco as a result of the Transactions, (iii) compensation amounts associated with the Company’s Management Incentive Plan originally scheduled for potential payment March 2022 that were accelerated and terminated as part of the Transactions, and (iv) compensation amounts associated with the anniversary payments to Tanya Domier.

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Domier’s anniversary payments were accelerated as part of the Transactions.

Represents non-cash

compensation expense related to issuance of PSUs, RSUs and stock options under the 2020 plan.

(b) Represents non-cash

compensation expense related to issuance of PSUs, RSUs, stock options and ESPP under the 2020 plan.

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the applicable periods.

See Note 6— Fair Value of Financial Instruments

to our unaudited condensed financial statements for the three months ended March 31, 2021 and 2020.

See Note 6—Fair Value of Financial Instruments to our unaudited condensed financial statements for the three and six months ended June 30, 2021 and 2020.

Represents fees and costs associated with activities related to our acquisitions and restructuring activities related to our equity ownership, including transaction bonuses paid in connection with the Transactions, professional fees, due diligence, public company readiness and integration activities.

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Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.

Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including

employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment;

and (ii) benefits received from government grants for COVID-19 relief.

Represents $0.9 million and $0.9 million of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the three months ended March 31, 2021 and 2020, respectively.

Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19,

including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment;

and (ii) benefits received from government grants for COVID-19

Represents $1.3 million, $2.2 million, $0.7 million, and $1.6 million of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the three and six months ended June 30, 2021 and 2020, respectively.

Represents the tax provision or benefit associated with the adjustments above, taking into account the Company’s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact.

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

Three Months Ended

Six Months Ended June 30,

(in thousands)

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Net Cash Provided by Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2021 consisted of net loss of $0.5 million adjusted for certain non-cash items,

Net cash provided by operating activities during the six months ended June 30, 2021 consisted of net income of $5.2 million adjusted for certain non-cash items,

including depreciation and amortization of $122.3 million and effects of changes in working capital.

Net cash provided by operating activities during the three months ended March 31, 2020 consisted of net loss of $21.7 million adjusted for certain non-cash

items, including depreciation and amortization of $60.2 million and effects of changes in working capital.

The decrease in cash provided by operating activities during the three months ended March 31, 2021 relative to the same period in 2020 was primarily due to the increase in working capital as a result of timing of payroll funding and an increase in inventory from our digital commerce business during the three months ended March 31, 2021.

Net cash provided by operating activities during the six months ended June 30, 2020, consisted of net loss of $59.5 million adjusted for certain non-cash items,

including depreciation and amortization of $119.0 million and effects of changes in working capital.

The decrease in cash provided by operating activities during the six months ended June 30, 2021 relative to the same period in 2020 was primarily due to the decreased need for working capital in the prior year as a result of COVID-19

related temporary suspensions of in-store

sampling services combined with the deferral of payment of our portion of Social Security taxes during the six months ended June 30, 2020.

Net Cash Used in Investing Activities

Net cash used in investing activities during the three months ended March 31, 2021 primarily consisted of the purchase of businesses, net of cash acquired of $14.0 million and purchase of property and equipment of $5.2 million.

Net cash used in investing activities during the three months ended March 31, 2020 primarily consisted of the purchase of businesses, net of cash acquired of $51.4 million and purchase of property and equipment of $8.5 million.

Net cash used in investing activities during the six months ended June 30, 2021 primarily consisted of the purchase of businesses, net of cash acquired of $20.4 million and purchase of property and equipment of $13.0 million.

Net cash used in investing activities during the six months ended June 30, 2020, primarily consisted of the purchase of businesses, net of cash acquired of $51.4 million and purchase of property and equipment of $15.4 million.

Net Cash (Used in) Provided by Financing Activities

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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.

Cash flows related to financing activities during the three months ended March 31, 2021 were primarily related to repayment of $50.0 million on the New Revolving Credit Facility and borrowings and repayments on our lines of credit.

Cash flows related to financing activities during the three months ended March 31, 2020 were primarily related to $80.0 million of borrowing under the revolving credit facility then in place, principal payments of $9.7 million on our lines of credit, principal payments of $6.5 million on our long-term debt and $2.2 million related to payments of contingent consideration and holdback payments.

Cash flows related to financing activities during the six months ended June 30, 2021 were primarily related to borrowings of $41.7 million and repayment of $92.8 million on the Revolving Credit Facility and our lines of credit and $6.4 million related to payments of contingent consideration and holdback payments

Cash flows related to financing activities during the six months ended June 30, 2020, were primarily related to the borrowing and subsequent repayment of $80.0 million on the Revolving Credit Facility and borrowings and repayments on our lines of credit, proceeds of $120.0 million from the AR Facility, proceeds of $2.8 million from one of our majority-owned subsidiaries operating in Japan entering into a local government loan program, principal payments of $13.3 million on our long-term debt and $7.6 million related to payments of contingent consideration and holdback payments.

Description of Credit Facilities

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The New 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.

liquidation or similar proceedings, material money judgments, material pension-plan events, certain change of control events and other customary events of default.

New Term Loan Facility

The New Term Loan Facility consists of a term loan facility denominated in US dollars in an aggregate principal amount of $1.325 billion.

The New Term Loan Facility is a term loan facility denominated in US dollars in an aggregate principal amount of $1.325 billion.

Borrowings under the New Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per annum of the principal amount.

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Senior Secured Notes

In connection with the Transactions, Advantage Solutions FinCo LLC (“Finco”) issued $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”).

In connection with the Transactions, Finco issued $775.0 million aggregate principal amount of 6.50% Senior Secured Notes due 2028 (the “Notes”).

Substantially concurrently with the Transactions, 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.

(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 Notes were sold to BofA Securities, Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co.

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The Notes were resold to certain non-U.S.

pursuant to Regulation S under the Securities Act of 1933, as amended (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.

persons pursuant to Regulation S under the Securities Act of 1933, as amended (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.

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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 New 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 New Revolving Credit Facility and equal in priority with liens securing the New 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 New 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 New 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 New 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.

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 New 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 New Revolving Credit Facility and equal in priority with liens securing the New Term Loan Facility), in each case, subject to certain limitations and exceptions and permitted liens.

subsidiaries.

Optional redemption for the Notes

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The Notes may also be redeemed at any time prior to November 15, 2023 at a redemption price equal to 100% of the aggregate principal amount of such Notes to be redeemed plus a “make-whole” premium, plus accrued and unpaid interest.

In addition, the Issuer may redeem up to 40% of the

original aggregate principal amount of Notes before November 15, 2023 with the net cash proceeds of certain equity offerings at a redemption price equal to 106.5% of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

In addition, the Issuer may redeem up to 40% of the original aggregate principal amount of Notes before November 15, 2023 with the net cash proceeds of certain equity offerings at a redemption price equal to 106.5% of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

Furthermore, prior to November 15, 2023 the Issuer may redeem during each calendar year up to 10% of the original aggregate principal amount of the Notes at a redemption price equal to 103% of the aggregate principal amount of such Notes to be redeemed, plus accrued and unpaid interest.

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and lack of perfection of liens on a material portion of the collateral, in each case subject to applicable grace periods.

First Lien Credit Agreement and Second Lien Credit Agreement

Prior Credit Facilities

In connection with the Transactions, our debt arrangements under the First Lien Credit Agreement and Second Lien Credit Agreement as well as the AR Facility that existed as of September 30, 2020 were repaid and terminated with incremental costs of $86.8 million.

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Cash and Cash Equivalents Held Outside the United States

As of March 31, 2021 and December 31, 2020, $76.2 million and $87.7 million, respectively, of our cash and cash equivalents and marketable securities were held by foreign subsidiaries.

As of March 31, 2021, and December 31, 2020, $30.2 million and $28.9 million, respectively, of our cash and cash equivalents and marketable securities were held by foreign branches.

As of June 30, 2021 and December 31, 2020, $84.1 million and $87.7 million, respectively, of our cash and cash equivalents and marketable securities were held by foreign subsidiaries.

As of June 30, 2021, and December 31, 2020, $31.6 million and $28.9 million, respectively, of our cash and cash equivalents and marketable securities 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 $2.1 million of withholding tax as of December 31, 2020 for unremitted earnings in Canada with respect to which the Company does not have an indefinite reinvestment assertion.

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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 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, we could elect to repatriate future earnings from foreign jurisdictions.

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Off-Balance Sheet

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 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.

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Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are included in our Annual Report on Form 10-K/A filed May 17, 2021 for the year ended December 31, 2020 and did not materially change during the three months ended March 31, 2021.

Our critical accounting policies and estimates are included in our Annual Report on Form 10-K/A

filed May 17, 2021 for the year ended December 31, 2020 and did not materially change during the three and six months ended June 30, 2021.

Recently Issued Accounting Pronouncements

See the information set forth in Note 1, Organization and Significant Accounting Policies – Recent Accounting Pronouncements

, to our unaudited condensed consolidated financial statements for the three months ended March 31, 2021 and 2020.

, to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021 and 2020.

included in “Part I, Financial Information—Item 1.

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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