Advantage Solutions Q3 2024 Earnings Report

Advantage Solutions EPS Results

• Actual EPS: -$3.00
• Consensus EPS: $2.78
• Beat/Miss: Missed by -$5.78
• One Year Ago EPS: -$1.75

Advantage Solutions Revenue Results

• Actual Revenue: $939.27 million
• Expected Revenue: $935.21 million
• Beat/Miss: Beat by +$4.06 million
• YoY Revenue Growth: N/A

Advantage Solutions Announcement Details

• Quarter: Q3 2024
• Date: 11/7/2024
• Time: Before Market Opens
• Conference Call Date: Thursday, November 7, 2024
• Conference Call Time: 8:30AM ET

Advantage Solutions (NASDAQ:ADV) is a provider of sales and marketing services for consumer goods companies, retailers and other brands. The company helps clients plan and execute programs designed to improve product visibility, shopper engagement and sales across retail and other commerce channels.

Its services include outsourced sales, retail merchandising, brand and shopper marketing, experiential marketing, digital marketing, e-commerce support, analytics and business intelligence. Advantage Solutions works with clients across categories such as food and beverage, consumer packaged goods, health and wellness, household products and other consumer markets.

The company serves clients through operations in the United States and internationally. Advantage Solutions was established in 1987 and has expanded through organic growth and acquisitions into a broad provider of outsourced sales and marketing services. It became a publicly traded company on the Nasdaq in 2021 following a business combination with Conyers Park II Acquisition Corp.

Advantage Solutions Q3 2024 Earnings Call Transcript

Key Takeaways

• Vantage delivered Q3 organic revenues up 2% to $802 million and adjusted EBITDA up 8% to $101 million, driven by healthy growth in Experiential and Retailer Services while Branded Services saw a 4% decline.
• Experiential Services posted a 12% revenue increase and 41% EBITDA growth on higher events per day and expanded direct-to-home sampling, and Retailer Services grew revenues 2% with an 11% EBITDA improvement through more efficient labor deployment.
• The company’s transformation plan is accelerating investments in ERP replacement, cloud migration, AI-enabled analytics and strategic partnerships (TCS, IBM, image recognition and planogram technology) to boost efficiency and cross-selling.
• Vantage expanded client relationships by adding store remodels and private-brand programs for a national grocery chain, launching a convenience-store CPG offering, supporting a major department store’s holiday fragrance events, and cross-selling sales and e-commerce services to beverage and beauty startups.
• On the balance sheet, Vantage repurchased $80 million of debt at a discount, lowered full-year interest expense by $5 million, repurchased $13 million of shares, generated $69 million in adjusted free cash flow (67% conversion), and maintains net leverage around 4× while staying on track for low-single-digit growth and strong cash conversion.

Presentation

[Operator]

As a reminder, this conference is being recorded. It is now my pleasure to introduce Ruben Mella, Vice President of Investor Relations. Thank you, Ruben. You may begin.

[Ruben Mella, VP of Investor Relations at Advantage Solutions]

Thank you, Operator. Welcome to Advantage Solutions' third-quarter earnings conference call. Dave Peacock, Chief Executive Officer, Chris Growe, Chief Financial Officer, and Sean Choksi, Senior Vice President of Strategy and M&A, are on the call today. Dave and Chris will provide their prepared remarks, after which we will open the call for a question-and-answer session. During this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and involve assumptions, risks, and uncertainties that are difficult to predict. It's important to note that actual outcomes and results could differ materially due to several factors, including those described more fully in the company's annual report on Form 10-K filed with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors.

[Ruben Mella, VP of Investor Relations at Advantage Solutions]

The company does not undertake any duty to update or revise any forward-looking statements except as required by law. We want to draw your attention to the fact that our remarks today will focus on certain non-GAAP financial measures. Our earnings release, issued earlier today, provides a reconciliation of these non-GAAP financial measures to the most comparable GAAP measure. This call is being webcast, and a recording will also be available on the company's Investor Relations website. During the prepared remarks, we will refer to a presentation which can be found in the Events and Presentations section of the IR website. As a reminder, unless otherwise stated, the financial results discussed today will be from continuing operations. And now, I would like to turn the call over to Dave Peacock.

[Dave Peacock, CEO at Advantage Solutions]

Thanks, Ruben, and good morning, everyone, and thank you for joining us. Our discussion this morning will center on the third-quarter results and outlook for the year, how we are expanding our relationships with clients, and the progress we are making on our transformation journey. We are pleased with our results in the third quarter. On an organic year-over-year basis, excluding the deconsolidation of the European JV and pass-through costs, revenues increased approximately 2% to $802 million, and Adjusted EBITDA increased 8% to $101 million. We remain committed to delivering our guidance for the year. Experiential Services and Retailer Services delivered healthy performance, resulting in revenue and Adjusted EBITDA growth. A timing benefit from the fourth quarter partly drove their results.

[Dave Peacock, CEO at Advantage Solutions]

In Branded Services, we continue to navigate the impacts of a challenging consumer environment for our clients while managing costs and leveraging new tools and technology to enhance our sales and merchandising effectiveness. Advantage is positioned squarely at the intersection of brands and retail, with a diverse mix of capabilities, unique insights, and connectivity to help our clients increase profitable sales regardless of market conditions. Our scale in managing over 70,000 dedicated teammates who serve more than 100,000 retail locations nationwide creates a network effect for greater speed, agility, and precision to the critical services that fuel growth for brands and retailers. Through our transformation initiatives, we are further differentiating our client solutions through technology and analytics while enhancing cost-effectiveness regardless of economic circumstances. We are confident this will increase the resilience of our operating performance and drive better outcomes for our 4,000-strong client base.

[Dave Peacock, CEO at Advantage Solutions]

The largest of them have been with us, on average, for more than 15 years and have a 95% retention rate over time. During the quarter, we continue to grow our client roster and expand Advantage's service offerings with existing clients. We did this across both core and adjacent services while also expanding into new market categories and channels. Starting with Retailer Services, we aim to better utilize our labor to improve profit growth and margins with our full suite of services with existing clients and adding new clients by expanding into adjacent market segments with our core offerings. During the quarter, we expanded our services with a national grocery chain where we have been providing merchandising services by adding store remodels and adjacent offerings through our trade services team.

[Dave Peacock, CEO at Advantage Solutions]

Trade services represents an expansion of our core capabilities, providing in-store construction and build-out to bring physical shopping experience to life. In the last seven months, we built the interior store fixtures at 65 new locations, including the grocer's first small-format store, which opened this year in New York City. The team also helped to expand the grocer's North American footprint by building its first physical store in Canada. We are also expanding our private brand services beyond the grocery market, where we enjoy a very high relative market share, into faster-growing channels like value, C-stores, and mass to enhance growth. We recently signed an agreement with a national chain of convenience stores. Our services will include optimizing what they stock, reducing their operational costs, and developing a best-in-class private brand program.

[Dave Peacock, CEO at Advantage Solutions]

We're confident in our ability to deliver on this initial scope of work, which will set the stage to further develop our relationship moving forward. Turning to Experiential Services, our goal is to continue to enhance our execution against growing demand for in-store events, which helps cover fixed costs and drive efficiencies. We are also growing our low-labor direct-to-home sampling, which comes with a high margin and an attractive market as consumers continue to utilize online solutions for shopping. These efforts enable sampling for online shopping and drive traffic to brick-and-mortar stores. We recently signed an agreement with a major department store to support their fragrance team for the upcoming holiday season. Furthermore, we are collaborating with them on a creative and production strategy for a fragrance kit launched in the spring.

[Dave Peacock, CEO at Advantage Solutions]

Lastly, one of our goals in Branded Services is to accelerate cross-selling with existing clients to solve their challenges. We expanded our relationship with a startup energy beverage company in the better-for-you category by adding several services, including headquarters sales and the convenience channel, e-commerce, and order-to-cash. Another opportunity was with a beauty company where we expanded our services from supporting their Amazon business to collaborating with them on headquarters sales in Canada. It's early days, but we are discovering more and more opportunities to cross-sell our capabilities within Branded Services and in the marketing and selling of our interconnected capabilities across all three business segments. Turning to an update on our transformation, we have taken significant actions to simplify the business, streamline processes, and improve financial discipline. Our progress is rooted in focusing on where we have a right to win.

[Dave Peacock, CEO at Advantage Solutions]

This includes strengthening our core competitive advantages in areas like headquarter selling, retail merchandising, sampling, and other areas of support that we provide to our clients and customers. We are modernizing technology and forming strategic collaborations to enhance scale and productivity. This allows us to serve our clients while being nimble in addressing a changing market. We are clarifying and simplifying our offerings and further unifying our marketing approach to support lead generation, cross-selling, and upselling. Core to our transformation is improving operating efficiency. We are making progress on company-wide IT initiatives such as ERP replacement, modernizing cybersecurity, migration to the cloud, and investing in a data lake for enhanced analytics and a full utilization of AI where applicable to support our strategy.

[Dave Peacock, CEO at Advantage Solutions]

To date, we have upgraded several IT systems through Tata Consultancy Services to support the tools our frontline teammates use to serve clients, ultimately saving time and costs. We are partnering with IBM to outsource procurement in the areas with the biggest savings opportunities, leveraging their expertise while maintaining vendor quality. We are collaborating with established and emerging technology companies to equip our Branded and Retailer Services teams with modern tools like image recognition, shelf-level intelligence, and proprietary planogram technology. These efforts not only drive efficiencies but also free up time to help brands and retailers capitalize on growth opportunities. Our market position and tech tools give us a unique vantage point on the industry. We have access to performance insights at multiple levels down to the retailer, location, aisle, and shelf.

[Dave Peacock, CEO at Advantage Solutions]

Our teams visualize data-driven strategies with tools like Power BI to share a comprehensive view of the market, including distribution, pricing, and the impact of promotions. With our reach and relationships, we can translate those real-time insights into action faster and at scale in ways competitive models cannot. We are actively prioritizing AI use cases in contract management, routing merchandisers, HR workflow, sales tools, and analysis of large data sets. We are also exploring potential partnerships and third-party vendors to provide AI platforms and applications at a larger scale and at a faster rate of adoption. Another area of focus for our transformation is the digital shopping experience. We are elevating our omnichannel capabilities across all three segments to offer retailers scalable and targeted omnichannel solutions that connect the dots for clients and create value at scale.

[Dave Peacock, CEO at Advantage Solutions]

We are partnering with technology firms that are leaders in providing CPGs and retailers with the tools to reach those consumers. This is a great opportunity for us to bridge online activity to drive traffic into stores with a workforce that can execute on the ground at scale, like physically placing promos and signage to help brands break through and drive conversion at the shelf where the consumer decision is made at the point of sale. To conclude, we are working closely with our clients to meet their needs as they address meaningful changes in consumer behavior. We are doing this by focusing on where we provide the most differentiated capabilities and where we can drive consistent results through improved processes and technologies enabled by our transformation. We remain on track to deliver against our previously stated guidance for the year, which is a testament to our teammates' hard work.

[Dave Peacock, CEO at Advantage Solutions]

With that, I will now pass the call over to Chris for his insights into our financial performance.

[Chris Growe, CFO at Advantage Solutions]

Thank you, Dave, and welcome to all of you joining the call today. As a reminder, I will discuss our performance, excluding pass-through costs and the deconsolidation of the European JV. We delivered favorable results in the third quarter, featuring a consistent performance in our retailer and Experiential Services segments and tight control of our costs. While we did have a shift in the timing of some activities from the fourth quarter to the third quarter, benefiting experiential and Retailer Services, the underlying performance of the business was solid. Revenues for Branded Services declined 4% to $283 million. The weaker environment for CPG companies and retailers impacted the revenue performance, although activity did increase sequentially due to the seasonality of client orders. Our results demonstrated an improvement in overall execution and cost management efforts but resulted in a 4% decline in Adjusted EBITDA to $49 million.

[Chris Growe, CFO at Advantage Solutions]

Experiential Services increased revenues by 12% to $254 million. Adjusted EBITDA grew 41% to $23 million. These favorable results were driven by continued strong client demand for our services as events per day increased year-over-year by 11%. Revenues for Retailer Services increased 2% to $265 million, driven by increased activity for merchandising services. Our focus on efficient execution regarding management of talent deployment and overall costs drove an 11% increase in Adjusted EBITDA to $29 million. Moving to our balance sheet, during the quarter, we voluntarily repurchased approximately $80 million of notes and term loan debt at attractive discounts. As of September 30th, our total funded debt outstanding was approximately $1.7 billion, with nearly 91% of our debt hedged or at fixed interest rates.

[Chris Growe, CFO at Advantage Solutions]

Because of lower debt and reduced term loan pricing, we expect full-year interest expense to be $150 million-$160 million, a $5 million reduction from the prior guidance. Our net leverage ratio, including discontinued operations, was approximately four times Adjusted EBITDA. During the quarter, we used approximately $13 million of cash to repurchase 3.5 million shares to take advantage of what we believe is an undervalued stock price and to offset employee incentive-related dilution. We continue to assess the timing and scope of our transformation projects to optimize spending. As a result, total capital expenditures through the year's first nine months were approximately $50 million. Given the current spending trend, we expect to end the year around the lower end of the $65 million-$80 million guidance range.

[Chris Growe, CFO at Advantage Solutions]

We generated approximately $69 million in Adjusted Unleveraged Free Cash Flow in the third quarter, or 67% of Adjusted EBITDA, inclusive of discontinued operations. The drivers for the favorable cash conversion included a reduction in DSOs through better working capital management and lower-than-planned CapEx. We have a clear line of sight to end the year with low single-digit revenue and Adjusted EBITDA growth from continued operations. We expect the fourth quarter to have a year-over-year increase in Adjusted EBITDA similar to the third quarter, partly due to the timing shift I mentioned earlier. We maintain our expectations for Adjusted Unleveraged Free Cash Flow conversion towards the upper end of the 55%-65% range, including discontinued operations. We ended the quarter with approximately $196 million of cash.

[Chris Growe, CFO at Advantage Solutions]

Because of the investments this year, organizational changes to transform the business, and our cash needs, we continue to expect to generate minimal excess cash in 2024. Thank you for your time. I will now turn it back over to Dave.

[Dave Peacock, CEO at Advantage Solutions]

Thanks, Chris. Our long-term success will come from our 70,000 dedicated and passionate teammates. We are grateful for their efforts to do more as a strategic partner for our clients. We remain optimistic about delivering on our operating plan for the year and staying focused on meeting the needs of our clients as they navigate shifting consumer behavior. At the same time, we continue to advance the initiatives that will enhance our capabilities as a unified company, leveraging our full potential. We will now take your questions. Operator?

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to withdraw your question. For participants using speaker equipment, picking up your handset before pressing the Star keys may be necessary. One moment, please, while we pull for questions. And we will take our first question from Pallav Saini with Canaccord. Please go ahead. Your line is open.

[Pallav Saini, VP of Equity Research at Canaccord Genuity]

Good morning. Thanks for taking our questions. Maybe the first one on the macro. David, maybe you can shed some light on how your clients in the branded segment are thinking about next year, any change in sentiment there relative to last quarter?

[Dave Peacock, CEO at Advantage Solutions]

Thanks for the question. Yeah, I think we're not obviously providing any guidance for 2025. I think clearly you've seen macro environment probably a little tougher on the consumer on average. As we work with our clients, you can imagine it's a little bit of a mixed bag because we cross just about every category in the store. And so different categories are kind of experiencing different realities, whether they're a premium brand or a value brand. You're continuing to see growth in units in the private label space and kind of flat to a slight decline in the national brand space broadly. But then, like I said, there's different realities across different categories.

[Dave Peacock, CEO at Advantage Solutions]

That being said, I would say that the recent economic data that came out on the third quarter relative to GDP growth probably gives people some optimism that the consumer is a little more resilient than maybe anticipated. And that may create a little more of an optimistic view as you get into 2025 more broadly in the consumer space. But as you get into the first half of 2025, I think people are still being cautiously optimistic relative to kind of a full recovery of consumer.

[Pallav Saini, VP of Equity Research at Canaccord Genuity]

That's great, color. Thank you. And on experiential, it's good to see the solid growth there. Is it performing in line with your expectations, or is it outperforming at this point? And would you say that the activity there is back to the pre-pandemic levels? Any thoughts there?

[Chris Growe, CFO at Advantage Solutions]

Yeah. So I'd say that they're outperforming a little bit of what we expected going into the year. And it's a combination. It's really, really strong execution. There has obviously been recovery, but we're really moving past recovery into what I'd call sort of a sequential growth within this space.

[Dave Peacock, CEO at Advantage Solutions]

There's still room for recovery with certain clients who are clients of that service. But some of our larger clients, they're largely back to recovery and performing in some cases ahead of where they had been pre-pandemic. The key for that business really is the events per day, which I know Chris spoke about. That's such a key driver in helping cover fixed costs within that business and in serving as the volume indicators to demand for the service.

[Chris Growe, CFO at Advantage Solutions]

I'll just add one quick point to that.

[Chris Growe, CFO at Advantage Solutions]

For experiential, we are still not back to that 2019 level, but we're definitely making good progress toward that and intend to continue to see that, as Dave said, with events per day growing. We also talked about a little bit of a pull forward, a little bit of effect on Q3 from Q4. You do all your planning by segment and per events, and those can shift a little bit from time to time. So there's a little bit of element of that, and then just underneath that, as Dave said, a really good performance in the business, and you're seeing that sort of leverage in the business as we rebuild on the events.

[Pallav Saini, VP of Equity Research at Canaccord Genuity]

Great. Thanks for that, color, Chris, and Dave. And just the last one from us. Any update on what you're seeing on the wage front and your expectations for the rest of the year?

[Dave Peacock, CEO at Advantage Solutions]

Yeah. Wage growth is still a little more inflated above what I'd call historic norms, but it's coming back to that level. I'd say that there's a little slack in the labor market. I think for us, our focus, frankly, is on getting better utilization of our existing labor. We talked about it in our prepared remarks, but we have an opportunity to get more hours for our teammates if we just manage our task assignments and routing a little better. That may ultimately result in less hires down the road, but more kind of hours worked, if you will, so one thing we do is track labor hours pretty closely, and I don't anticipate a change in that because the more labor hours we have demanded for our services, that means we're growing our business.

[Dave Peacock, CEO at Advantage Solutions]

If we're managing our business properly, we can utilize the labor we have more efficiently.

[Pallav Saini, VP of Equity Research at Canaccord Genuity]

Great. Thanks for the color.

[Dave Peacock, CEO at Advantage Solutions]

Thank you.

[Operator]

Thank you. Our next question comes from Greg Parrish with Morgan Stanley. Please go ahead. Your line is open.

[Greg Parrish, VP of Equity Research at Morgan Stanley]

Hey, guys. Good morning. Congrats on the result. I guess it's been a few months now since two competitors in the market came together. I guess, have you seen any impact on your business from a competition standpoint? And maybe from a higher level, do you think there could be impact over time, if at all? If you can maybe comment on that.

[Dave Peacock, CEO at Advantage Solutions]

Yeah. Thanks, Greg. At this point, I wouldn't say there's any specific impact. The transaction obviously closed. I won't speculate or do anything that would provide guidance for 2025. But I can say that, like a lot of consumer products companies, a lot of businesses right now, I'm sure they're going to go through their period of integration and what have you. So does that provide an opportunity? That's to anybody's speculation. But we're not seeing anything specific within the business as a byproduct of that combination right now.

[Greg Parrish, VP of Equity Research at Morgan Stanley]

Gotcha. Okay. So on pricing here and labor, I guess you've talked in the past, being as aggressive as you can on pricing. And it was great to hear in the last question that a little more slack in the labor market. Maybe talk about that spread between labor and pricing, right? Where is it today? And if that spread persists, do you think there could be maybe other client exits, or do you think that's tight enough now where you're sort of near equilibrium? Maybe just flesh that out a little bit.

[Dave Peacock, CEO at Advantage Solutions]

Yeah. I mean, I'd say that we continue to have success, and I think a lot of our clients are understanding the labor environment more and more. We've talked about this in past calls that if you look back, we may not make up for all the wage inflation that was experienced within our business over the last, call it, three years with pricing actions nearer term. But we're getting closer to equilibrium as wage inflation moderates a bit, and we're able to take, again, with fair pricing. I mean, at the end of the day, we provide a service to our clients and customers, and that has to come with a value and an ROI, and so we can achieve that in a number of different ways. And part of it is, are we driving an ROI that justifies the price?

[Dave Peacock, CEO at Advantage Solutions]

But also, are we managing as efficiently as possible and, frankly, making sure that we're leveraging the cost per labor hour as well, not just the wage inflation, because there are things you can do from a productivity standpoint that can help you mitigate some of that wage inflation as well. So that's one of the areas of focus for us.

[Chris Growe, CFO at Advantage Solutions]

Hey, Greg, I might just add that if you look at whether it's this quarter or the year-to-date period, two of your labor-heavy businesses, like retail and experiential, perform pretty well. So I think that's just a good indication of our management of pricing overall, management of our labor hours, our mix of businesses.

[Chris Growe, CFO at Advantage Solutions]

This gets to Dave's point that we're trying to manage this, again, not necessarily looking backwards, but just in the environment we're in. I think we're doing a good job of managing those labor hours, the pricing, and then the ultimate sort of margin benefit from that.

[Greg Parrish, VP of Equity Research at Morgan Stanley]

Okay. Great. Thanks for the color. And then maybe lastly, talk about promotions maybe on the rise here. You've talked about this in the past as well, but maybe flesh it out again. Some of the puts and takes across the business and with the new segment reporting, I think, might be helpful. Just the net impact of promotions and kind of if that rises, is that potentially a tailwind? And sort of what's the net impact across the business?

[Dave Peacock, CEO at Advantage Solutions]

Yeah. We've seen fluctuating results more broadly in the market on percent of volume sold on deal. We saw it increase. We saw it recede a bit. It's moved around a bit. And I'd have to look at the latest data if we're at kind of pre-pandemic levels. I think we're close if we're not there. And in the periods, we've been a little bit above. The more promotion there is in the marketplace, one should drive unit volume. Unit volume is beneficial in our business because while we realize revenue flow through from commission, unit volume is really tied to the work we do. And if you think about how promotions are realized in the retail environment, it's typically through display and some of the activities that our retail merchandising teams do on behalf of consumer products companies.

[Dave Peacock, CEO at Advantage Solutions]

So on the margin, I think it's generally a positive if we're at a promotion level that's sort of consistent with where the market had been pre-pandemic. Obviously, during the pandemic, that number dropped pretty dramatically and took some time to build back.

[Greg Parrish, VP of Equity Research at Morgan Stanley]

Gotcha. Thanks very much.

[Dave Peacock, CEO at Advantage Solutions]

Thank you.

[Operator]

Thank you. Our next question comes from Faiza Alwy with Deutsche Bank. Please go ahead. Your line is open.

[Faiza Alwy, Managing Director at Deutsche Bank]

Yes. Hi. Thank you so much. I just wanted to ask a little bit more about the timing of impact that you mentioned. I think you said in experiential and retailer. Can you give us a bit more color and maybe just help us quantify how much that helped the quarter by?

[Dave Peacock, CEO at Advantage Solutions]

Yeah. I think we're going to Faiza, that's a good question and well-anticipated. I just want to tell you that, and I said it a bit earlier in the response, that you plan your year, and there's an element of our work that is done, I'll call it project work, that you try to model that based on what your expectations are, and you plan that closely with all your customers and clients. But you never can get it perfectly right based on the month, as an example. But I would just tell you is for the third quarter, we did have a little bit of a benefit, especially in experiential and retailer, on just timing. Q3 looked a little better than Q4 due to that activity.

[Dave Peacock, CEO at Advantage Solutions]

And then what I'd tell you is we tried to be a little more explicit around the expectations for Q4 growth, growth in line with Q3. So a good quarter, but it may give you some perspective on a little bit of that shift from Q4 to Q3 and how to think about quantifying that.

[Faiza Alwy, Managing Director at Deutsche Bank]

Okay. Understood, and then thank you for putting the slide on the new business opportunities, the expanding services. I'm curious how you would characterize sort of overall new business sales growth relative to history, and when do you think we'll start to see the positive impact of some of these initiatives? I'm trying to figure out how significant these are or if this is just something that you're highlighting and it's something that you've seen historically.

[Dave Peacock, CEO at Advantage Solutions]

Yeah. I know. It's a great question, Faiza. I'd say that some of these are kind of earlier seeds within a strategy to expose the part of the company to more growth. So for instance, when we mentioned the private label side, as we expand into these other areas, the private label business we have is doing well right now, just generally. But we recognize the need to expose that business to more growth channels, and so that's some early stages. Some of the other things we're doing in the area of cross-selling and expanding existing services for clients, and when everybody knows this, a challenging consumer market, especially for unit growth, the services we provide can bring great value and great benefit to our CPG clients. We're seeing a lot of new business activity within our teams.

[Dave Peacock, CEO at Advantage Solutions]

I think to varying degrees relative to size and impact on the overall business. I'm not going to highlight or forecast anything for 2025, but we're very pleased with the level of business development activity we have in the business right now.

[Faiza Alwy, Managing Director at Deutsche Bank]

Great. Thank you for that. And then just last one, Branded Services, I know top line was declined a little bit, but overall margins were better. So I'm curious what led to that. I know you've been talking about labor efficiency, whether it was that or mix or any other color there would be helpful.

[Faiza Alwy, Managing Director at Deutsche Bank]

Yeah. I mean, I think that falls more on the labor efficiency side within that vertical. We have been really focused on leveraging a combination of technology and even at the risk of using a buzzword, AI, in that sector to be more efficient in how we deploy personnel and how we direct work. And just kind of overall, I think, in process, being more consistent in how we do what we do in the Branded Services space across the division has helped us drive some efficiency from a labor standpoint. So that's what's contributed to that margin growth.

[Faiza Alwy, Managing Director at Deutsche Bank]

All right. Great. Thank you very much.

[Operator]

Thank you, and there are no further questions at this time. I want to turn the call back over to Dave Peacock for closing comments.

[Dave Peacock, CEO at Advantage Solutions]

Thank you. We appreciate everybody joining the call. We're excited about the quarter we had and look forward to hopefully finishing the year strong. We appreciate everybody's attention, and we look forward to talking to you next quarter. Thank you.

[Operator]

And this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Dave Peacock, CEO
• Chris Growe, CFO
• Ruben Mella, VP of Investor Relations

Analysts

• Faiza Alwy, Managing Director at Deutsche Bank
• Greg Parrish, VP of Equity Research at Morgan Stanley
• Pallav Saini, VP of Equity Research at Canaccord Genuity