Advantage Solutions posts $25.1M net loss in Q3 2026
After quarter-end, the expanded restructuring program was expected to incur approximately $7.0 million to $10.0 million in additional costs through early 2027.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Advantage Solutions Inc. (ADV) reported third-quarter revenue of $913.7 million, compared with $915.0 million a year earlier, and a net loss of $25.1 million versus net income of $20.6 million. For the first nine months, revenue was $2.673 billion and net loss was $159.6 million, compared with $66.0 million in 2025.
Operating cash flow for the nine months was $68.2 million, compared with $15.9 million a year earlier. Long-term debt, net, was $1.510 billion as of September 30, 2026. A subsidiary completed a refinancing that included a $1.035 billion term loan facility and an exchange of approximately 99% of $561.4 million in 2028 notes for 2030 notes and $43.9 million in cash consideration.
ADV sold an interest in part of a European joint venture business for £20.0 million, receiving £10.0 million at closing and deferring £10.0 million for payment 12 months after completion; it retained a 49.6% interest in the remaining portion. After quarter-end, it expanded restructuring activities and expected approximately $7.0 million to $10.0 million in additional costs through early 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month operating cash flow rose to $68.2 million from $15.9 million.
Negative
- Major pointNine-month net loss widened to $159.6 million from $66.0 million.
- Moderate pointThird-quarter results shifted to a $25.1 million net loss from net income of $20.6 million.
Filing Explained
At September 30, 2026, up to $395.7 million remained available to borrow, subject to limits; it was borrowing capacity, not cash on hand.
This quarterly update details the active 2030 notes: they carry a
As of
The borrower reported compliance with applicable covenants as of
Key Figures
Key Terms
equity method financial
payment-in-kind fee financial
borrowing base financial
fixed charge coverage ratio financial
performance obligation financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were ADV's third-quarter results?
How much operating cash flow did ADV report for the first nine months of 2026?
What were the terms of ADV's 2028 notes exchange?
What does ADV's expanded restructuring include?
AI-generated analysis. How Rhea-AI works. Not financial advice.
res
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of |
|
(I.R.S. Employer |
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
|
|
|
|
Non-accelerated filer |
|
Smaller reporting company |
|
|
|
Emerging growth company |
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of October 30, 2026, the registrant had
Advantage Solutions Inc.
TABLE OF CONTENTS
|
|
Page |
|
PART I—FINANCIAL INFORMATION |
|
3 |
|
|
|
|
|
Item 1. Financial Statements (Unaudited) |
|
3 |
|
|
|
|
|
|
Condensed Consolidated Balance Sheets |
|
3 |
|
|
|
|
|
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income |
|
4 |
|
|
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity |
|
5 |
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows |
|
7 |
|
|
|
|
|
Notes to the Condensed Consolidated Financial Statements |
|
8 |
|
|
|
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
23 |
|
|
|
|
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
|
39 |
|
|
|
|
|
Item 4. Controls and Procedures |
|
39 |
|
|
|
|
|
PART II—OTHER INFORMATION |
|
40 |
|
|
|
|
|
Item 1. Legal Proceedings |
|
40 |
|
|
|
|
|
Item 1A. Risk Factors |
|
40 |
|
|
|
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
|
41 |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities |
|
41 |
|
|
|
|
|
Item 4. Mine Safety Disclosures |
|
41 |
|
|
|
|
|
Item 5. Other Information |
|
41 |
|
|
|
|
|
Item 6. Exhibits |
|
42 |
|
|
|
|
|
Signatures |
|
43 |
|
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data) |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Accounts receivable, net of allowance for expected credit losses of $ |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property, equipment, and capitalized software, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Other intangible assets, net |
|
|
|
|
|
|
||
Investments in unconsolidated affiliates |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Current portion of long-term debt, net |
|
$ |
|
|
$ |
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
Deferred revenues |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt, net of current portion |
|
|
|
|
|
|
||
Deferred income tax liabilities |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Equity attributable to stockholders of Advantage Solutions Inc. |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid in capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Loans to Karman Topco L.P. |
|
|
( |
) |
|
|
( |
) |
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Treasury stock, at cost; |
|
|
( |
) |
|
|
( |
) |
Total stockholders' equity |
|
|
|
|
|
|
||
Total liabilities and stockholders' equity |
|
$ |
|
|
$ |
|
||
See Notes to the Condensed Consolidated Financial Statements.
3
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands, except share and per share data) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of long-lived assets |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
(Gain) loss on divestiture, net |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income from investments in European joint venture |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating income |
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
||||
Income from unconsolidated investments |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other expense, including debt fees |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total other expenses, net |
|
|
|
|
|
|
|
|
|
|
|
||||
(Loss) income before income tax expense |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income tax (benefit) expense |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Basic (loss) income per common share |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Diluted (loss) income per common share |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Weighted-average number of common shares: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive (Loss) Income: |
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Total comprehensive (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
See Notes to the Condensed Consolidated Financial Statements.
4
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Loans to |
|
|
Comprehensive |
|
|
Stockholders' |
|
|||||||||||||||
(in thousands, except share data) |
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Topco |
|
|
Loss |
|
|
Equity |
|
|||||||||
Balance at July 1, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Interest on loans to Karman Topco L.P. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Purchase of treasury stock |
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Shares issued under 2020 Employee Stock Purchase Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Payments for taxes related to net share settlement under 2020 Incentive Award Plan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Incentive Award Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Loans to |
|
|
Comprehensive |
|
|
Stockholders' |
|
|||||||||||||||
(in thousands, except share data) |
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Topco |
|
|
Loss |
|
|
Equity |
|
|||||||||
Balance at July 1, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Interest on loans to Karman Topco L.P. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Employee Stock Purchase Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Payments for taxes related to net share settlement under 2020 Incentive Award Plan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Incentive Award Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Loans to |
|
|
Comprehensive |
|
|
Stockholders' |
|
|||||||||||||||
(in thousands, except share data) |
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Topco |
|
|
Loss |
|
|
Equity |
|
|||||||||
Balance at January 1, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Interest on loans to Karman Topco L.P. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Retirement of treasury shares |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Purchase of treasury stock |
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Shares issued under 2020 Employee Stock Purchase Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Payments for taxes related to net share settlement under 2020 Incentive Award Plan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Incentive Award Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2026 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
Other |
|
|
Total |
|
|||||||||
|
Common Stock |
|
|
Treasury Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Loans to |
|
|
Comprehensive |
|
|
Stockholders' |
|
|||||||||||||||
(in thousands, except share data) |
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Topco |
|
|
Income (Loss) |
|
|
Equity |
|
|||||||||
Balance at January 1, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Foreign currency translation adjustments |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Interest on loans to Karman Topco L.P. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Purchase of treasury stock |
|
( |
) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Equity-based compensation of Karman Topco L.P. |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Employee Stock Purchase Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Payments for taxes related to net share settlement under 2020 Incentive Award Plan |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Shares issued under 2020 Incentive Award Plan |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Balance at September 30, 2025 |
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
See Notes to the Condensed Consolidated Financial Statements.
6
ADVANTAGE SOLUTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Nine Months Ended September 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities |
|
|
|
|
|
|
||
Non-cash adjustments on derivatives and non-cash interest income |
|
|
( |
) |
|
|
( |
) |
Amortization of deferred financing fees |
|
|
|
|
|
|
||
Deferred financing costs recognized at debt modification |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Equity-based compensation of Karman Topco L.P. |
|
|
|
|
|
( |
) |
|
Stock-based compensation |
|
|
|
|
|
|
||
Gain on repurchases of Senior Secured Notes and Term Loan Facility debt |
|
|
|
|
|
( |
) |
|
Loss (gain) on divestiture, net |
|
|
|
|
|
( |
) |
|
Income from unconsolidated investments |
|
|
( |
) |
|
|
( |
) |
Distribution received from equity method investments |
|
|
|
|
|
|
||
Impairment and related restructuring costs |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
||
Accrued compensation and benefits |
|
|
( |
) |
|
|
( |
) |
Deferred revenues |
|
|
( |
) |
|
|
|
|
Other accrued expenses and other liabilities |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Purchase of investments in unconsolidated affiliates |
|
|
( |
) |
|
|
( |
) |
Purchase of property and equipment and development of capitalized software |
|
|
( |
) |
|
|
( |
) |
Proceeds from divestitures |
|
|
|
|
|
|
||
Net cash provided by investing activities |
|
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Borrowings under lines of credit |
|
|
|
|
|
|
||
Payments on lines of credit |
|
|
( |
) |
|
|
( |
) |
Payment of deferred financing fees for line of credit modification |
|
|
( |
) |
|
|
|
|
Principal payments on long-term debt |
|
|
( |
) |
|
|
( |
) |
Repurchases of Senior Secured Notes and Term Loan Facility |
|
|
|
|
|
( |
) |
|
Deferred consideration paid for purchases in unconsolidated affiliates |
|
|
|
|
|
( |
) |
|
Proceeds from 2020 Employee Stock Purchase Plan |
|
|
|
|
|
|
||
Payments for taxes related to net share settlement of equity awards |
|
|
( |
) |
|
|
( |
) |
Purchase of treasury stock |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
Net effect of foreign currency changes on cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
|
|
||
Purchases of property and equipment recorded in accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
See Notes to the Condensed Consolidated Financial Statements.
7
ADVANTAGE SOLUTIONS INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Organization and Significant Accounting Policies
Advantage Solutions Inc. (the “Company”) is a provider of outsourced solutions to consumer packaged goods (“CPG”) brands and retailers. The Company’s Class A common stock is listed on the Nasdaq Global Select Market under the symbol “ADV.”
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Pursuant to these rules and regulations, the Company has condensed its consolidated financial statements and omitted certain information and disclosures the Company normally includes in the annual consolidated financial statements as required by accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, all adjustments, which are of a normal recurring nature and necessary for a fair statement of the results as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025, have been reflected in the condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 3, 2026. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period.
Reverse Stock Split
On March 26, 2026, the Company effected a 1-for-25 reverse stock split of its Class A common stock. In connection with the reverse stock split, the Company amended its certificate of incorporation to reduce the number of authorized shares of Class A common stock and preferred stock by dividing the previously authorized share amounts by the reverse stock split ratio and applying a 1.5x multiplier. No fractional shares were issued in connection with the reverse stock split, and stockholders who otherwise would have been entitled to a fractional share received cash in lieu thereof. All share and per share amounts presented in these unaudited condensed consolidated financial statements, including shares underlying stock-based compensation equity awards, have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse stock split did not affect the per share par value of the Company’s Class A common stock.
Retirement of Treasury Shares
During the nine months ended September 30, 2026, the Company retired
Revenue Recognition
The Company recognizes revenue when control of promised goods or services is transferred to the client in an amount that reflects the consideration that the Company expects to be entitled to in exchange for such goods or services. Substantially all of the Company’s contracts with clients involve the transfer of a service to the client, which represents a performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided. In most cases, the contracts provide for a performance obligation that is comprised of a series of
8
distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). For these contracts, the Company allocates the ratable portion of the consideration based on the services provided in each period of service to such period.
Revenues related to the Branded Services segment are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing headquarter relationship management, execution of merchandising strategies and omni-commerce marketing services. Revenues within the Branded Services segment are further disaggregated between brokerage services, branded merchandising services and omni-commerce marketing services. Brokerage services revenues are primarily outsourced sales and services for CPG brands at retailer headquarters, in-store and online. Branded merchandising services relate to merchandising in-store and online for CPG brands. Omni-commerce marketing services primarily relate to digital and field marketing services.
Experiential Services segment revenues are primarily recognized in the form of fee-for-service and cost-plus fees for providing in-store, digital sampling and demonstrations, where the Company manages highly customized, large-scale sampling programs for leading brands and retailers.
Retailer Services segment revenues are primarily recognized in the form of commissions, fee-for-service and cost-plus fees for providing consulting services related to private brand development, the execution of merchandising strategies and marketing strategies within retailer locations, including retail media networks and analyzing shopper behavior. Revenues within the Retailer Services segment are further disaggregated between advisory services, retailer merchandising services and agency services to retailers. Advisory services primarily consist of consulting services related to private brand development. Retailer merchandising services primarily relate to the execution of merchandising strategies. Agency services primarily consist of providing marketing strategies within retail locations.
Disaggregated revenues were as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Branded Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Brokerage services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Branded merchandising services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Omni-commerce marketing services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Branded Services revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Experiential Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Experiential services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total Experiential Services revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Retailer Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail merchandising services |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Advisory services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Agency services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Retailer Services revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred revenues represent cash payments that are received in advance of the Company’s satisfaction of the applicable performance obligation and are included in Deferred revenues in the Condensed Consolidated Balance Sheets. Deferred revenues are recognized as revenues when the related services are performed for the client. Revenues recognized during the three and nine months ended September 30, 2026 that were included in Deferred revenues as of December 31, 2025 were $
9
Impairment on Capitalized Software Development Costs
During the three and nine months ended September 30, 2026, the Company paused the development of a new human capital management (“HCM”) system while it evaluates the scope, design and timing of the project. As a result of the pause, the Company determined that it was no longer probable that the project would be completed as originally designed and recorded an impairment of $
Accounting Standards Recently Issued but Not Yet Adopted by the Company
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs to reflect incremental and iterative development methods. The amendments remove prescriptive development stages and require capitalization of software costs once management has authorized and committed to funding the project and it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted and application on a prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements and related disclosures.
Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.
2. Divestiture
Investments in European Joint Venture
During the first quarter of 2026, the Company executed a series of agreements related to its investments in a European joint venture, which was accounted for under the equity method and in which the Company held an ownership interest as of December 31, 2025. Under the terms of these agreements, the Company sold its interest in a portion of the European joint venture business for total consideration of £
For the three and nine months ended September 30, 2025, the Company presented its proportionate share of earnings from the European joint venture within Operating income, as reflected in Income from investments in European joint venture, because the results of that investment were considered integral to the Company’s operations at that time. Following completion of the restructuring noted above, the Company reassessed the nature of its retained equity‑method investment and concluded that the results of the remaining European joint venture investment are no longer integral to the Company’s core operating activities. Accordingly, for the three and nine months ended September 30, 2026, the Company presents its proportionate share from the European joint venture within Other expenses (income), as reflected in Income from unconsolidated investments within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
10
2024 Divestitures
During the first quarter of 2026, the Company received the remaining installment of approximately $
3. Goodwill and Intangible Assets
The carrying amount of goodwill as of September 30, 2026 and December 31, 2025 was $
Amortization of intangible assets was $
The following tables set forth information for the Company's intangible assets:
|
|
|
|
September 30, 2026 |
|
|||||||||||||
(amounts in thousands) |
|
Weighted Average Useful Life |
|
Gross |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Carrying |
|
||||
Finite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Client relationships |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Trade names |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total finite-lived intangible assets |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trade name |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Total other intangible assets |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
December 31, 2025 |
|
|||||||||||||
(amounts in thousands) |
|
Weighted Average Useful Life |
|
Gross |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Carrying |
|
||||
Finite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Client relationships |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Trade names |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total finite-lived intangible assets |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade name |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Total other intangible assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
As of September 30, 2026, estimated future amortization expense of the Company’s finite-lived intangible assets is as follows:
(in thousands) |
|
|
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total amortization expense |
|
$ |
|
|
11
4. Debt
Long-term debt consisted of the following:
(in thousands) |
September 30, |
|
|
December 31, |
|
||
|
2026 |
|
|
2025 |
|
||
Term Loan Facility |
$ |
|
|
$ |
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
Total long-term debt |
|
|
|
|
|
||
Less: current portion |
|
|
|
|
|
||
Less: unamortized debt discount |
|
|
|
|
|
||
Less: debt issuance costs |
|
|
|
|
|
||
Long-term debt, net |
$ |
|
|
$ |
|
||
Refinancing
On March 11, 2026, Advantage Sales & Marketing Inc., an indirect wholly owned subsidiary of the Company (the “Borrower”), completed a refinancing transaction designed to extend maturities, enhance liquidity, and simplify its capital structure. The transaction was executed through a series of interrelated financing actions, including (i) an exchange offer and consent solicitation with respect to the Borrower’s outstanding senior secured notes, (ii) a refinancing and amendment of the Borrower’s term loan facility, and (iii) amendments to the Borrower’s asset‑based revolving credit facility.
As part of the refinancing, holders of approximately
Concurrently with the notes exchange, the Borrower refinanced its existing term loan facility by (i) entering into a new senior secured first lien term loan facility at an extended maturity (the “2030 Term Loan Facility”) in an aggregate principal amount of $
The 2030 Notes
The Borrower’s obligations under the 2030 Notes are guaranteed by Karman Intermediate Corp. and each of the Borrower’s direct and indirect wholly owned material U.S. subsidiaries and Canadian subsidiaries (the “Guarantors”), and are secured by a lien on substantially all of the Borrower’s and Guarantors’ assets (subject to certain permitted exceptions). The 2030 Notes have a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility) and a second‑priority lien on the current asset collateral (equal in priority with the liens securing the 2030 Term Loan Facility and second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens.
The 2030 Notes may be redeemed, in whole at any time or in part from time to time, at
12
must use
The 2030 Term Loan Facility
Borrowings under the Borrower’s 2030 Term Loan Facility amortize in equal quarterly installments in an amount equal to
The Borrower’s obligations under the 2030 Term Loan Facility are guaranteed by the Guarantors, and are secured by a lien on substantially all of the Borrower’s and the Guarantors’ assets (subject to certain permitted exceptions). The 2030 Term Loan Facility has a first‑priority lien on the fixed asset collateral (equal in priority with the liens securing the 2030 Notes) and a second‑priority lien on the current asset collateral (second in priority to the liens securing the 2030 ABL), in each case, subject to other permitted liens. The 2030 Term Loan Facility matures in April 2030, subject to potential extensions in accordance with its terms. The 2030 Term Loan Facility includes a payment-in-kind fee that was recorded as debt discount and is being amortized to interest expense over the term of the 2030 Term Loan Facility using the effective interest method.
The Company uses derivative instruments to manage its exposure to changes in SOFR on the 2030 Term Loan Facility. As of September 30, 2026, interest rate collars with a total notional amount of $
The 2030 Asset-based Revolving Credit Facility
The Borrower’s 2030 ABL provides for revolving loans and letters of credit in the aggregate amount of up to $
Borrowings under the 2030 ABL bear interest at variable rates based on SOFR or a base rate, plus applicable margins, at the Borrower’s option. The applicable margins for the 2030 ABL are
The Borrower’s obligations under the 2030 ABL are guaranteed by the Guarantors and are secured by liens on substantially all assets of the Borrower and of the Guarantors, subject to certain permitted exceptions. These obligations have a first‑priority lien on current asset collateral and a second‑priority lien on fixed asset collateral, which is junior to the liens securing the 2030 Notes and the 2030 Term Loan Facility discussed above, in each case subject to permitted liens.
As of September 30, 2026, the Borrower had the ability to borrow up to $
13
Debt Covenants
The 2030 Notes, the 2030 ABL and the 2030 Term Loan Facility each contain customary affirmative and negative covenants applicable to the Borrower and the Guarantors, and the Borrower’s subsidiaries. Collectively, these covenants restrict the ability of such parties to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock, or make other restricted payments; (iii) prepay, redeem, repurchase or modify the terms of certain junior or other indebtedness; (iv) issue certain preferred stock or similar equity securities; (v) make loans, advances, acquisitions or other investments; (vi) sell or otherwise dispose of or transfer assets; (vii) incur liens or other security interests on assets; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the ability of subsidiaries to pay dividends; (x) change the Borrower’s line of business; and (xi) merge or consolidate with, or sell all or substantially all of their assets to, another entity.
Substantially all of the foregoing covenants under the 2030 Notes will be suspended, and the guarantees provided by the Guarantors released, if the Borrower maintains certain investment grade ratings for the 2030 Notes, subject to customary exceptions.
The 2030 ABL additionally requires the Borrower to maintain a fixed charge coverage ratio (as defined in the related credit agreement) of not less than 1.00 to 1.00 as of the end of each fiscal quarter during any period in which excess availability is less than the greater of (a) $
The agreements governing the 2030 Notes, the 2030 Term Loan Facility and the 2030 ABL contain additional affirmative and negative covenants, including related definitions, thresholds, limitations and exceptions, that vary between the facilities. The 2028 Notes, 2030 Notes, and the 2030 Term Loan Facility rank pari passu in right of payment, subject to the applicable intercreditor arrangements and collateral priorities. As of September 30, 2026, the Borrower was in compliance with all applicable covenants.
The Borrower determined that all components of the Refinancing were considered to be modifications. Fees paid to creditors in connection with the Refinancing, including payment-in-kind fees associated with the 2030 Notes and the 2030 Term Loan Facility, were recorded as adjustments to the carrying amounts of the related debt instruments and are being amortized as interest expense over the remaining terms of the modified arrangements. Third-party fees of $
Debt Maturities
Future minimum principal payments on long-term debt as of September 30, 2026 are as follows:
(in thousands) |
|
|
|
Remainder of 2026 |
$ |
|
|
2027 |
|
|
|
2028 |
|
|
|
2029 |
|
|
|
2030 |
|
|
|
Total future minimum principal payments |
$ |
|
|
14
5. Fair Value of Financial Instruments
The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The following table sets forth the Company’s financial assets and liabilities measured on a recurring basis at fair value, categorized by input level within the fair value hierarchy.
|
|
September 30, 2026 |
|
|||||||||||||
(in thousands) |
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total assets measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
December 31, 2025 |
|
|||||||||||||
(in thousands) |
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Liabilities measured at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative financial instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total liabilities measured at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest Rate Collar Agreements
The Company has interest rate collar contracts with an aggregate notional value of principal of $
As of September 30, 2026, the fair value of the Company’s outstanding interest rate collars of $
These interest rate collars have not been designated as hedging instruments for accounting purposes; accordingly, changes in fair value are recognized immediately in earnings. During the three months ended September 30, 2026 and 2025, the Company recorded a gain of $
15
Long-term Debt
The following tables set forth the carrying values and fair values of the Company’s financial liabilities measured on a recurring basis, categorized by input level within the fair value hierarchy:
(in thousands) |
|
Carrying Value |
|
|
Fair Value |
|
||
Balance at September 30, 2026 |
|
|
|
|
|
|
||
Term Loan Facility |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Total long-term debt |
|
$ |
|
|
$ |
|
||
(in thousands) |
|
Carrying Value |
|
|
Fair Value |
|
||
Balance at December 31, 2025 |
|
|
|
|
|
|
||
Term Loan Facility |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
Total long-term debt |
|
$ |
|
|
$ |
|
||
The fair value of debt reported in the table above is based on adjusted price quotations on the debt instruments in an active market.
6. Related Party Transactions
Unconsolidated Affiliates
During the three months ended September 30, 2026 and 2025, the Company recognized revenues of an immaterial amount from its investments in unconsolidated affiliates. During the nine months ended September 30, 2026 and 2025, the Company recognized revenues of $
Share Repurchases
During the nine months ended September 30, 2026, the Company repurchased approximately
Other related party transactions
Certain current and former members of the Company’s Board of Directors and an officer of the Company currently serve or previously served as directors or officers of, or are affiliated with investment funds that hold interests in, certain clients. For the periods during which these entities were related parties, the Company recognized revenues from these clients of $
7. Income Taxes
The Company had an effective tax rate of
The effective tax rate for the three and nine months ended September 30, 2026 differed from the statutory rate primarily due to an increase in the valuation allowance recorded against the deferred tax asset related to interest expense limitation
16
carryforward, partially offset by an income tax benefit related to the foreign currency loss on historical branch repatriations and remeasurement of deferred tax liability resulting from changes in applicable state tax rates.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant amendments to the U.S. federal tax code. As a result of this legislation, the Company recorded a discrete income tax benefit of $
8. Segments
The Company’s reportable segments, consisting of Branded Services, Experiential Services, and Retailer Services, have separate financial information and are evaluated regularly by the Company’s Chief Operating Decision Maker (“CODM”), a position currently held by the Company's Chief Executive Officer, in deciding how to allocate resources and in assessing performance.
The tables below summarize revenues, significant expenses and operating income (loss) by reportable segment:
|
Three Months Ended September 30, 2026 |
|
|||||||||||||
(in thousands) |
Branded Services |
|
|
Experiential Services |
|
|
Retailer Services |
|
|
Total Company |
|
||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
||||
Reimbursable expenses1 |
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items2 |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
Three Months Ended September 30, 2025 |
|
|||||||||||||
(in thousands) |
Branded Services |
|
|
Experiential Services |
|
|
Retailer Services |
|
|
Total Company |
|
||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
||||
Reimbursable expenses1 |
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items2 |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Income from investments in European joint venture |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on divestiture |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
|
Nine Months Ended September 30, 2026 |
|
|||||||||||||
(in thousands) |
Branded Services |
|
|
Experiential Services |
|
|
Retailer Services |
|
|
Total Company |
|
||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
||||
Reimbursable expenses1 |
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items2 |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on divestiture |
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
Nine Months Ended September 30, 2025 |
|
|||||||||||||
(in thousands) |
Branded Services |
|
|
Experiential Services |
|
|
Retailer Services |
|
|
Total Company |
|
||||
Revenues |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits |
|
|
|
|
|
|
|
|
|
|
|
||||
Reimbursable expenses1 |
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment items2 |
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
||||
Income from investments in European joint venture |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Gain on divestiture |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Total segment operating expenses |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total segment operating (loss) income |
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
(1) Reimbursable expenses are costs incurred in the delivery of services to the Company's clients that the client has agreed to reimburse, including media, sample, retailer fees and other marketing and production costs.
(2) The “other segment items” category primarily consists of costs incurred in the execution of service obligations, including supplies, technology, and other direct expenses such as travel and indirect general and administrative expenses such as professional fees as well as the expense for impairment of long-lived assets. These costs align with the segment-level information regularly provided to the CODM and represent the difference between revenue and the significant expense categories above in determining segment profitability.
9. Restructuring
In the first quarter of 2026, the Company initiated restructuring activities to align operating costs with revenue, reduce corporate costs, and transition certain back-office functions to a third-party operating model.
(in thousands) |
|
|
Three Months Ended September 30, 2026 |
|
|
Nine Months Ended September 30, 2026 |
|
||
Branded Services |
|
|
$ |
|
|
$ |
|
||
Experiential Services |
|
|
|
|
|
|
|
||
Retailer Services |
|
|
|
|
|
|
|
||
Total restructuring expenses |
|
|
$ |
|
|
$ |
|
||
For the three and nine months ended September 30, 2026, $(
Subsequent to September 30, 2026, the Company announced an expansion of its restructuring program to include a reduction in force, primarily in the Branded Services segment, and the exit of certain underutilized leases and other
18
operating contracts. The Company expects to incur additional costs of approximately $
10. Commitments and Contingencies
11. Stock-Based Compensation
The Company has granted under the Company’s 2020 Incentive Award Plan, as amended (the “Plan”), nonqualified stock options, restricted stock units (“RSUs”), and performance restricted stock units (“PSUs”). Stock-based compensation expense is recognized based on the fair value at the grant date over the requisite service period.
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Total stock-based compensation before tax |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Tax benefit |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total stock-based compensation expense included in net loss (income) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Performance Restricted Stock Units
PSUs granted in fiscal years 2026, 2025 and 2024 cliff-vest after three years at a rate ranging from
PSUs granted in fiscal year 2023 vest over a
The fair value of PSU grants was equal to the closing price of the Company’s stock on the date of the applicable grant.
19
stock is not permitted until achievement of the performance targets are probable of occurring.
Year Granted |
|
Number of |
|
|
Number of |
|
|
Number of |
|
|
Weighted Average Grant Date Fair Value Per Share |
|
|
Maximum Remaining Unrecognized Compensation Expense |
|
|
Weighted-average remaining requisite service periods |
|
||||||
2026 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||||
2025 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||||
2024 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||||
2023 |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||||
The following table summarizes the PSU activity for the nine months ended September 30, 2026:
|
|
Performance Share Units |
|
|
Weighted Average Grant |
|
||
Outstanding at January 1, 2026 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Distributed |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
PSU performance adjustment (1) |
|
|
( |
) |
|
$ |
|
|
Outstanding at September 30, 2026 (2) |
|
|
|
|
$ |
|
||
|
|
(2) PSU award activity for each year used in the three year average achievement is presented at target until three year average achievement is approved by the HCC, at which point the awards are adjusted as outstanding awards, subject to additional performance requirements, TSR and service-based vesting conditions.
Restricted Stock Units
RSUs are subject to the recipient’s continued service to the Company. RSUs are generally scheduled to vest over
During the nine months ended September 30, 2026, the following activities involving RSUs occurred under the Plan:
|
|
Number of RSUs |
|
|
Weighted Average Grant |
|
||
Outstanding at January 1, 2026 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Distributed |
|
|
( |
) |
|
$ |
|
|
Forfeited |
|
|
( |
) |
|
$ |
|
|
Outstanding at September 30, 2026 |
|
|
|
|
$ |
|
||
As of September 30, 2026, the total remaining unrecognized compensation cost related to RSUs amounted to $
20
Stock Options
During the nine months ended September 30, 2026, the following activities involving nonqualified stock options occurred under the Plan:
|
|
Stock Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Life |
|
|
Aggregate Intrinsic Value |
|
||||
Outstanding at January 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Cancelled/Expired |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at September 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
The fair value of the employee stock options was estimated using the following weighted average assumptions using a Black-Scholes option valuation model:
|
|
Period Ended September 30, 2026 |
|
|
Exercise Price |
|
$ |
|
|
Dividend yield |
|
|
% |
|
Expected volatility |
|
|
% |
|
Risk-free interest rate |
|
|
% |
|
Expected term |
|
|
|
|
|
|
|
|
|
As of September 30, 2026, the Company had approximately $
12. Earnings Per Share
The Company calculates earnings per share using a dual presentation of basic and diluted earnings per share. Basic earnings per share is calculated by dividing net income attributable to stockholders of the Company by the weighted-average shares of common stock outstanding without the consideration for potential dilutive shares of common stock. Diluted earnings per share represents basic earnings per share adjusted to include the potentially dilutive effect of performance stock units, restricted stock units, the employee stock purchase plan and stock options. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding and the potential dilutive shares of common stock for the period determined using the treasury stock method. During periods of net loss, diluted loss per share is equal to basic loss per share because the antidilutive effect of potential common shares is disregarded.
21
The following is a reconciliation of basic and diluted (loss) earnings per common share:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands, except share and earnings per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding - basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee stock purchase plan and stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding - diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income per share - basic |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Net (loss) income per share - diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
In accordance with the treasury stock method the weighted average shares outstanding assuming dilution include the incremental effect of stock-based awards, except when such effect would be antidilutive. Stock-based awards of
13. Subsequent Events
Subsequent to September 30, 2026, the Company announced a strategic realignment initiative. Additional information regarding the initiative is included in Note 9, Restructuring.
On October 15, 2026, the Company entered into a pay-fixed, receive-floating interest rate swap with a notional amount of $
22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”), including the section titled “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) including statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain such terms. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”). Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission (the “SEC”), we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this Quarterly Report, whether as a result of new information, future events, changes in assumptions or otherwise.
Business Overview
We are a leading omni-commerce business solutions provider to CPG brands and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce, and shopper marketing. We generate demand for brands and retailers of all sizes, helping get the right products on the shelf, whether physical or digital, and into the hands of consumers in every way they shop. We use a scaled platform to innovate as a trusted partner with our clients, solving problems to increase their efficiency and effectiveness across a broad range of channels.
We report financial results for the following three reportable segments. Through our Branded Services segment, which generated approximately 27.1% and 33.5% of our revenues in the nine months ended September 30, 2026 and 2025, respectively, we provide services to CPG brands through three main categories: brokerage, branded merchandising and omni-commerce marketing services. Through our Experiential Services segment, which generated approximately 46.1% and 39.8% of our revenues in the nine months ended September 30, 2026 and 2025, respectively, we help brands and retailers reach consumers and convert shoppers into buyers through in-store and online sampling and demonstrations. Through our Retailer Services segment, which generated approximately 26.8% and 26.7% of our revenues in the nine months ended September 30, 2026 and 2025, respectively, we provide end-to-end advisory, retailer merchandising and agency services to retailers.
Our quarterly results are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters, as a result of higher consumer spending. We generally record slightly lower revenues in the first fiscal quarter of each year, as our clients begin to roll out new programs for the year, and consumer spending generally is less in the first fiscal quarter than other quarters. The timing of our clients’ marketing expenses, associated with marketing campaigns and new product launches, along with variability in project activity in our Retailer Services and Branded Services segments, can also result in fluctuations from one quarter to another.
Recent Developments
For the third quarter of 2026, we reported revenues of $913.7 million and a net loss of $25.1 million, compared to revenues of $915.0 million and net income of $20.6 million in the same period of the prior year. Operating income was $7.5 million, a decrease of $32.6 million, which included $8.1 million of noncash impairment charges and the absence of an
23
$8.5 million gain on divestiture and $1.4 million of income from our European joint venture recognized in the third quarter of 2025.
Our Experiential Services segment delivered another strong quarter of revenue growth, resulting in the seventh sequential quarter of growth, driven by continued favorable demand and execution. The Retailer Services segment experienced modest revenue growth, driven by retailer merchandising and private brand advisory services, partially offset by lower product sales on our specialized import business. Branded Services results remained under pressure, reflecting lower volumes, client losses and reduced scope of services as consumer brands and retailers navigate an uncertain macroeconomic environment that continues to weigh on consumer spending. On a consolidated basis, operating income was $7.5 million in the third quarter of 2026, a decline of $32.6 million year-over-year. The decrease reflected declines of $32.8 million in Branded Services, and $5.7 million in Experiential Services, partially offset by an increase of $5.9 million in Retailer Services. On a consolidated basis, Adjusted EBITDA, a non-GAAP financial measure, was $85.4 million in the third quarter of 2026, a decrease of $14.2 million as compared to $99.6 million for the same period in the prior year. The decrease reflected declines of $24.1 million in Branded Services, partially offset by an increase of $9.8 million in Retailer Services. Adjusted EBITDA for Experiential Services was effectively flat year over year.
Year-over-year comparisons are affected by divestitures completed after the third quarter of 2025. The divested businesses contributed approximately $5.4 million and $2.8 million of Revenues and Adjusted EBITDA, respectively, to our third quarter of 2025, which are not reflected in the same period of 2026.
During the third quarter of 2026, we paused our technology development related to a new human capital management (“HCM”) system and recorded an impairment of previously capitalized software development costs. We are reassessing the scope, design, and timing of the system against our current business needs.
Subsequent to September 30, 2026, we announced a strategic realignment initiative intended to align our cost structure with current revenue levels. The initiative includes a reduction in force of certain full-time employees, primarily in our Branded Services segment, the exit of certain underutilized leases and the exit of other operating contracts. We estimate that we will incur additional costs of approximately $7.0 million to $10.0 million prior to completion in early 2027, primarily related to employee severance, lease termination and other workforce transition activities, including technology and professional services. See Note 9—Restructuring to our accompanying unaudited condensed consolidated financial statements.
Executive Summary
|
Three Months Ended September 30, |
|
|
Change Reported |
|
|
Nine Months Ended September 30, |
|
|
Change Reported |
|
||||||||||||||||||||
(amounts in thousands) |
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||||||
Revenues |
$ |
913,739 |
|
|
$ |
915,012 |
|
|
$ |
(1,273 |
) |
|
|
(0.1 |
)% |
|
$ |
2,672,791 |
|
|
$ |
2,610,511 |
|
|
$ |
62,280 |
|
|
|
2.4 |
% |
Operating income |
|
7,538 |
|
|
|
40,160 |
|
|
|
(32,622 |
) |
|
|
(81.2 |
)% |
|
$ |
13,392 |
|
|
$ |
35,550 |
|
|
$ |
(22,158 |
) |
|
|
(62.3 |
)% |
Net (loss) income |
|
(25,098 |
) |
|
|
20,565 |
|
|
|
(45,663 |
) |
|
|
(222.0 |
)% |
|
$ |
(159,636 |
) |
|
$ |
(66,005 |
) |
|
$ |
(93,631 |
) |
|
|
(141.9 |
)% |
Adjusted Net (Loss) Income (1) |
|
20,866 |
|
|
|
53,961 |
|
|
|
(33,095 |
) |
|
|
(61.3 |
)% |
|
$ |
(16,841 |
) |
|
$ |
52,335 |
|
|
$ |
(69,176 |
) |
|
|
(132.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Branded Services |
|
17,604 |
|
|
|
41,657 |
|
|
|
(24,053 |
) |
|
|
(57.7 |
)% |
|
$ |
60,263 |
|
|
$ |
103,638 |
|
|
$ |
(43,375 |
) |
|
|
(41.9 |
)% |
Experiential Services |
|
35,425 |
|
|
|
35,320 |
|
|
|
105 |
|
|
|
0.3 |
% |
|
|
95,681 |
|
|
|
73,276 |
|
|
|
22,405 |
|
|
|
30.6 |
% |
Retailer Services |
|
32,348 |
|
|
|
22,577 |
|
|
|
9,771 |
|
|
|
43.3 |
% |
|
|
73,015 |
|
|
|
67,228 |
|
|
|
5,787 |
|
|
|
8.6 |
% |
Adjusted EBITDA |
$ |
85,377 |
|
|
$ |
99,554 |
|
|
$ |
(14,177 |
) |
|
|
(14.2 |
)% |
|
$ |
228,959 |
|
|
$ |
244,142 |
|
|
$ |
(15,183 |
) |
|
|
(6.2 |
)% |
|
|
In the third quarter of 2026, revenues were $913.7 million, which represented a $1.3 million or 0.1% decrease as compared to the same period last year. Reimbursable expenses accounted for a net $2.3 million decrease (a $24.7 million decrease in Branded Services partially offset by a $22.4 million increase in Experiential Services), with the offsetting $1.0 million increase driven by growth in Experiential Services and Retailer Services of $31.5 million and $2.5 million, respectively, substantially offset by a decline in Branded Services of $33.0 million.
24
For the nine months ended September 30, 2026, revenues were $2,672.8 million, which represented a $62.3 million or 2.4% increase as compared to the same period last year. Reimbursable expenses accounted for $12.2 million or 19.6% of the increase (a $66.0 million increase in Experiential Services partially offset by a $53.8 million decrease in Branded Services), with the remaining increase of $50.1 million driven by growth in Experiential Services and Retailer Services of $128.0 million and $18.1 million, respectively, partially offset by a decline in Branded Services of $96.0 million.
We generated operating income of $7.5 million in the third quarter of 2026, compared to $40.2 million in the prior year period. The $32.6 million decrease included: i) $8.1 million of noncash impairment charges and a $2.0 million litigation settlement reserve in the third quarter of 2026; (ii) the absence of an $8.5 million gain on divestiture and $1.4 million of European joint venture income recognized in the third quarter of 2025; (iii) the absence of $5.0 million of COVID-19 related employee retention credits recognized in the third quarter of 2025, which was partially offset by $3.4 million lower restructuring, reorganization and transformation-related expenses and $1.5 million lower stock-based compensation expense. The remaining decline reflected lower revenues in Branded Services and higher cost of revenue in Experiential Services, partially offset by lower cost of revenues in Retailer Services.
For the nine months ended September 30, 2026, operating income was $13.4 million, a decrease of $22.2 million, as $15.7 million of lower restructuring, reorganization and transformation-related expenses and $5.4 million of lower stock-based compensation expense were more than offset by the current year noncash impairment charges of $8.1 million, the absence of the prior year divestiture gain of $8.5 million and joint venture income of $5.6 million, the absence of prior year $5.7 million of COVID-19 related employee retention credits and lower revenues in Branded Services.
Results of Operations for the Three and Nine Months Ended September 30, 2026 and 2025
The following table sets forth items derived from the Company’s consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 in dollars and as a percentage of total revenues.
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
(amounts in thousands) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
Revenues |
$ |
913,739 |
|
|
|
100.0 |
% |
|
$ |
915,012 |
|
|
|
100.0 |
% |
|
$ |
2,672,791 |
|
|
|
100.0 |
% |
|
$ |
2,610,511 |
|
|
|
100.0 |
% |
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
784,613 |
|
|
|
85.9 |
% |
|
|
776,421 |
|
|
|
84.9 |
% |
|
|
2,330,018 |
|
|
|
87.2 |
% |
|
|
2,246,107 |
|
|
|
86.0 |
% |
Selling, general, and administrative expenses |
|
62,483 |
|
|
|
6.8 |
% |
|
|
57,568 |
|
|
|
6.3 |
% |
|
|
166,716 |
|
|
|
6.2 |
% |
|
|
191,090 |
|
|
|
7.3 |
% |
Impairment of long-lived assets |
|
8,091 |
|
|
|
0.9 |
% |
|
|
— |
|
|
|
0.0 |
% |
|
|
8,091 |
|
|
|
0.3 |
% |
|
|
— |
|
|
|
0.0 |
% |
Depreciation and amortization |
|
51,014 |
|
|
|
5.6 |
% |
|
|
50,743 |
|
|
|
5.5 |
% |
|
|
153,856 |
|
|
|
5.8 |
% |
|
|
151,802 |
|
|
|
5.8 |
% |
(Gain) loss on divestiture, net |
|
— |
|
|
|
0.0 |
% |
|
|
(8,472 |
) |
|
|
(0.9 |
)% |
|
|
718 |
|
|
|
0.0 |
% |
|
|
(8,472 |
) |
|
|
(0.3 |
)% |
Income from investments in European joint venture |
|
— |
|
|
|
0.0 |
% |
|
|
(1,408 |
) |
|
|
(0.2 |
)% |
|
|
— |
|
|
|
0.0 |
% |
|
|
(5,566 |
) |
|
|
(0.2 |
)% |
Total operating expenses |
|
906,201 |
|
|
|
99.2 |
% |
|
|
874,852 |
|
|
|
95.6 |
% |
|
|
2,659,399 |
|
|
|
99.5 |
% |
|
|
2,574,961 |
|
|
|
98.6 |
% |
Operating income |
|
7,538 |
|
|
|
0.8 |
% |
|
|
40,160 |
|
|
|
4.4 |
% |
|
|
13,392 |
|
|
|
0.5 |
% |
|
|
35,550 |
|
|
|
1.4 |
% |
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
38,758 |
|
|
|
4.2 |
% |
|
|
34,954 |
|
|
|
3.8 |
% |
|
|
113,520 |
|
|
|
4.2 |
% |
|
|
105,128 |
|
|
|
4.0 |
% |
Income from unconsolidated investments |
|
(1,131 |
) |
|
|
(0.1 |
)% |
|
|
— |
|
|
|
0.0 |
% |
|
|
(5,992 |
) |
|
|
(0.2 |
)% |
|
|
— |
|
|
|
0.0 |
% |
Other expense, including debt fees |
|
1,372 |
|
|
|
0.2 |
% |
|
|
(109 |
) |
|
|
0.0 |
% |
|
|
26,723 |
|
|
|
1.0 |
% |
|
|
(83 |
) |
|
|
0.0 |
% |
Total other expenses |
|
38,999 |
|
|
|
4.3 |
% |
|
|
34,845 |
|
|
|
3.8 |
% |
|
|
134,251 |
|
|
|
5.0 |
% |
|
|
105,045 |
|
|
|
4.0 |
% |
(Loss) income before income tax expense |
|
(31,461 |
) |
|
|
(3.4 |
)% |
|
|
5,315 |
|
|
|
0.6 |
% |
|
|
(120,859 |
) |
|
|
(4.5 |
)% |
|
|
(69,495 |
) |
|
|
(2.7 |
)% |
Income tax (benefit) expense |
|
(6,363 |
) |
|
|
(0.7 |
)% |
|
|
(15,250 |
) |
|
|
(1.7 |
)% |
|
|
38,777 |
|
|
|
1.5 |
% |
|
|
(3,490 |
) |
|
|
(0.1 |
)% |
Net (loss) income |
$ |
(25,098 |
) |
|
|
(2.7 |
)% |
|
$ |
20,565 |
|
|
|
2.2 |
% |
|
$ |
(159,636 |
) |
|
|
(6.0 |
)% |
|
$ |
(66,005 |
) |
|
|
(2.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Net (Loss) Income (1) |
$ |
20,866 |
|
|
|
2.3 |
% |
|
$ |
53,961 |
|
|
|
5.9 |
% |
|
$ |
(16,841 |
) |
|
|
(0.6 |
)% |
|
$ |
52,335 |
|
|
|
2.0 |
% |
Adjusted EBITDA (1) |
$ |
85,377 |
|
|
|
9.3 |
% |
|
$ |
99,554 |
|
|
|
10.9 |
% |
|
$ |
228,959 |
|
|
|
8.6 |
% |
|
$ |
244,142 |
|
|
|
9.4 |
% |
25
Comparison of the Three Months Ended September 30, 2026 and 2025
Revenues
|
|
Three Months Ended September 30, |
|
|
Change |
|
||||||||||
(amounts in thousands) |
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Branded Services |
|
$ |
231,152 |
|
|
$ |
288,804 |
|
|
$ |
(57,652 |
) |
|
|
(20.0 |
)% |
Experiential Services |
|
|
431,619 |
|
|
|
377,707 |
|
|
|
53,912 |
|
|
|
14.3 |
% |
Retailer Services |
|
|
250,968 |
|
|
|
248,501 |
|
|
|
2,467 |
|
|
|
1.0 |
% |
Total revenues |
|
$ |
913,739 |
|
|
$ |
915,012 |
|
|
$ |
(1,273 |
) |
|
|
(0.1 |
)% |
Branded Services segment revenues decreased $57.7 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The decrease includes a $24.7 million reduction in revenues from reimbursable expenses. Also impacting year over year comparisons, $5.4 million of revenues were reported in 2025 that did not occur in 2026 due to divestitures. Excluding the impact of reimbursable expenses and divestitures, the remaining decrease of $27.7 million was primarily attributable to lower volumes, client losses and reductions in scope of services, including the carryover effect of losses that occurred during 2025, which more than offset new business wins and price increases. These trends reflect continued macroeconomic uncertainty, as clients continue to manage their brand support spending with heightened scrutiny during the period.
Experiential Services segment revenues increased $53.9 million during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase includes $22.4 million of higher revenues from reimbursable expenses. Excluding the impact of reimbursable expenses, the remaining increase of $31.5 million was primarily driven by higher event volume on improved demand and execution rates, and higher average pricing.
Retailer Services segment revenues increased $2.5 million during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025 driven primarily by a higher volume of retail merchandising engagements, and higher volumes in private brands, where we earn commissions, partially offset by lower revenues in our specialized import business.
Cost of Revenues
Cost of revenues as a percentage of revenues for the three months ended September 30, 2026 was 85.9%, as compared to 84.9% for the three months ended September 30, 2025. Reimbursable expenses decreased $2.3 million. Excluding reimbursable expenses, cost of revenues increased $10.5 million. The increase was driven primarily by higher variable labor costs, primarily in Experiential Services on higher event volume, higher indirect costs, and an increase in our litigation reserve. These increases were partially offset by lower product costs in our specialized import business, lower fixed direct labor costs, refunds on prior year tariff costs, and lower employee benefit expenses.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses as a percentage of revenues for the three months ended September 30, 2026 was 6.8%, compared to 6.3% for the three months ended September 30, 2025. The increase was driven primarily by the absence of $5.0 million of COVID-19 related employee retention credits recognized in the third quarter of 2025 and higher shared services corporate costs, partially offset by $3.4 million lower restructuring, reorganization and transformation-related expenses and $1.5 million lower stock-based compensation expense.
Depreciation and Amortization Expense
Depreciation and amortization expense was $51.0 million for the three months ended September 30, 2026 compared to $50.7 million for the three months ended September 30, 2025. The net increase was primarily due to a $0.9 million increase in depreciation expense as a result of an increase in IT-related investments, partially offset by a $0.6 million decrease in intangible asset amortization expense driven by certain assets becoming fully amortized in the prior period.
26
Impairment of Long-Lived Assets
During the three months ended September 30, 2026, we paused our technology development related to a new HCM system and recorded an impairment of $8.1 million of previously capitalized software development costs. The impairment was allocated to our segments, with $2.9 million in Branded Services, $2.9 million in Experiential Services and $2.3 million in Retailer Services. The Company continues to evaluate the project and the related contractual arrangement. There was no impairment in the three months ended September 30, 2025.
(Gain) Loss on Divestiture, net and Income from Investments in European Joint Venture
The three months ended September 30, 2025 included an $8.5 million gain on divestiture of our ownership interest in an equity method investment and $1.4 million of income from our investments in the European joint venture, which was presented in operating income. There was no gain or loss on divestiture and no such income in the three months ended September 30, 2026. Beginning in 2026, our proportionate share of earnings of the retained investment is presented in Other expenses (income).
Operating Income (Loss)
|
|
Three Months Ended September 30, |
|
|
Change |
|
||||||||||
(amounts in thousands) |
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Branded Services |
|
$ |
(24,620 |
) |
|
$ |
8,196 |
|
|
$ |
(32,816 |
) |
|
|
(400.4 |
)% |
Experiential Services |
|
|
15,190 |
|
|
|
20,912 |
|
|
|
(5,722 |
) |
|
|
(27.4 |
)% |
Retailer Services |
|
|
16,968 |
|
|
|
11,052 |
|
|
|
5,916 |
|
|
|
53.5 |
% |
Total operating income |
|
$ |
7,538 |
|
|
$ |
40,160 |
|
|
$ |
(32,622 |
) |
|
|
(81.2 |
)% |
In the Branded Services segment, the segment moved from operating income of $8.2 million to an operating loss of $24.6 million during the three months ended September 30, 2026, as compared to the same period in the prior year. The change was primarily due to lower revenues, as discussed above, the absence of an $8.5 million gain on divestiture and $1.4 million of equity earnings in our European joint venture recognized in the third quarter of 2025, and an allocated $2.9 million long-lived asset impairment, partially offset by lower cost of revenues of $36.6 million, primarily on lower labor costs, depreciation and amortization of $0.6 million and selling, general and administrative expenses of $0.4 million, as discussed above.
In the Experiential Services segment, the decrease in operating income to $15.2 million during the three months ended September 30, 2026, as compared to $20.9 million in the same period in the prior year, was primarily due to higher cost of revenues of $51.8 million, primarily on higher variable direct labor costs and a litigation settlement reserve, higher selling, general and administrative expenses of $4.4 million, primarily on higher shared service corporate costs, and an allocated $2.9 million long-lived asset impairment, partially offset by higher revenues, as discussed above.
In the Retailer Services segment, the increase in operating income to $17.0 million during the three months ended September 30, 2026, as compared to $11.1 million in the same period in the prior year, was primarily due to lower cost of revenues of $7.0 million, primarily on lower product costs, and higher revenues, as discussed above, partially offset by an allocated $2.3 million long-lived asset impairment, higher selling, general and administrative expenses of $0.9 million and higher depreciation expense of $0.3 million.
Interest Expense, net
Interest expense, net increased by $3.8 million, to $38.8 million for the three months ended September 30, 2026, from $35.0 million for the three months ended September 30, 2025. The increase was driven primarily by a higher average borrowing rate during the third quarter of 2026 as compared to the same period in the prior year, partially offset by a lower average debt balance outstanding, both of which are significantly driven by the refinancing of our outstanding debt in the first quarter of 2026. Additional information regarding the debt refinancing is included in “Liquidity and Capital Resources—Credit Facilities.”
27
Income from Unconsolidated Investments
Income from unconsolidated investments was $1.1 million for the three months ended September 30, 2026. Beginning in 2026, our proportionate share of earnings of our equity method investments, including the retained European joint venture, is presented within Other expenses (income) within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. In the three months ended September 30, 2025, $1.4 million of income from the European joint venture was presented in Operating income within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
Other Expense, including Debt Fees
Other expense, including debt fees was $1.4 million for the three months ended September 30, 2026, compared to other income of $0.1 million for the three months ended September 30, 2025, and consisted of a $0.7 million loss on the disposition of a non-marketable equity security and $0.7 million of third-party fees associated with the debt refinancing.
Provision for Income Taxes
We recognized income tax benefits of $6.4 million and $15.3 million for the three months ended September 30, 2026 and 2025, respectively. The year-over-year change primarily reflects an increase in the valuation allowance recorded against the deferred tax asset related to interest expense limitation carryforward and partially offset by an income tax benefit recorded on foreign currency loss on historical branch repatriations for a recently filed election.
Comparison of the Nine Months Ended September 30, 2026 and 2025
Revenues
|
|
Nine Months Ended September 30, |
|
|
Change |
|
||||||||||
(amounts in thousands) |
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Branded Services |
|
$ |
724,122 |
|
|
$ |
873,866 |
|
|
$ |
(149,744 |
) |
|
|
(17.1 |
)% |
Experiential Services |
|
|
1,233,410 |
|
|
|
1,039,433 |
|
|
|
193,977 |
|
|
|
18.7 |
% |
Retailer Services |
|
|
715,259 |
|
|
|
697,212 |
|
|
|
18,047 |
|
|
|
2.6 |
% |
Total revenues |
|
$ |
2,672,791 |
|
|
$ |
2,610,511 |
|
|
$ |
62,280 |
|
|
|
2.4 |
% |
Branded Services segment revenues decreased $149.7 million for the nine months ended September 30, 2026, as compared to nine months ended September 30, 2025. The decrease includes a $53.8 million reduction in revenues from reimbursable expenses. Also impacting year over year comparisons, $15.2 million in revenues were reported in 2025 that did not occur in 2026 due to divestitures. Excluding the impact of reimbursable expenses and divestitures, the remaining decrease was primarily attributable to lower volumes, client losses and reductions in scope of services, including the carryover effect of losses that occurred during 2025, which more than offset new business wins. These trends reflect continued macroeconomic uncertainty, as clients continue to manage their brand support spending with heightened scrutiny during the period.
Experiential Services segment revenues increased $194.0 million during the nine months ended September 30, 2026, as compared to nine months ended September 30, 2025. The increase includes $66.0 million of additional revenues from reimbursable expenses. Excluding the impact of reimbursable expenses, the remaining increase of $128.0 million was primarily driven by higher event volume on improved demand and execution, and higher average pricing.
Retailer Services segment revenues increased $18.0 million during the nine months ended September 30, 2026, as compared to nine months ended September 30, 2025, which was driven primarily by higher volume of retail merchandise engagements and higher volumes in private brands, where we earn commissions, partially offset by lower revenues in our specialized import business.
Cost of Revenues
Cost of revenues as a percentage of revenues for the nine months ended September 30, 2026 was 87.2%, as compared to 86.0% for the same period in the prior year. Reimbursable expenses increased $12.2 million. Excluding reimbursable expenses, cost of revenues increased $71.7 million. The increase was driven primarily by higher variable
28
labor costs, primarily in Experiential Services on higher event volume, higher indirect costs, including $5.0 million of restructuring and reorganization charges, higher workers’ compensation costs and an increase in our litigation reserve. These increases were partially offset by lower product costs in our specialized import business, including refunds on prior year tariff costs, lower fixed direct labor costs and lower medical and other employee benefit expenses.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses as a percentage of revenues for the nine months ended September 30, 2026 was 6.2%, compared to 7.3% for the nine months ended September 30, 2025. The decrease was driven primarily by $20.7 million lower restructuring, reorganization and transformation-related expenses, $5.4 million lower stock-based compensation expense, lower shared services corporate costs and $3.2 million lower expected credit losses, partially offset by the absence of $5.7 million of COVID-19 related employee retention credits recognized in the prior year period.
Depreciation and Amortization Expense
Depreciation and amortization expense was $153.9 million for the nine months ended September 30, 2026 compared to $151.8 million for the nine months ended September 30, 2025. The net increase was primarily due to a $4.0 million increase in depreciation expense as a result of an increase in IT-related investments, including software placed in service for our global enterprise resource planning system, partially offset by a $1.9 million decrease in intangible asset amortization expense driven by certain assets becoming fully amortized in the prior period.
Impairment of Long-Lived Assets
During the nine months ended September 30, 2026, we paused our technology development related to a new HCM system and recorded an impairment of $8.1 million of previously capitalized software development costs. The impairment was allocated to our segments, with $2.9 million in Branded Services, $2.9 million in Experiential Services and $2.3 million in Retailer Services. The Company continues to evaluate the project and the related contractual arrangement. There was no impairment in the nine months ended September 30, 2025.
(Gain) Loss on Divestiture, net and Income from Investments in European Joint Venture
The nine months ended September 30, 2026 included a net loss of $0.7 million related to the sale of an investment in a private company compared to an $8.5 million gain on divestiture of our remaining 7.5% ownership interest in our combined foodservice business for nine months ended September 30, 2025.
Income from Investments in European Joint Venture was $5.6 million for the nine months ended September 30, 2025, which was presented in operating income. Beginning in 2026, our proportionate share of earnings of the retained investment is presented in Other expenses (income).
Operating Income (Loss)
|
|
Nine Months Ended September 30, |
|
|
Change |
|
||||||||||
(amounts in thousands) |
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Branded Services |
|
$ |
(64,741 |
) |
|
$ |
(17,666 |
) |
|
$ |
(47,075 |
) |
|
|
(266.5 |
)% |
Experiential Services |
|
|
45,402 |
|
|
|
28,267 |
|
|
|
17,135 |
|
|
|
60.6 |
% |
Retailer Services |
|
|
32,731 |
|
|
|
24,949 |
|
|
|
7,782 |
|
|
|
31.2 |
% |
Total operating income |
|
$ |
13,392 |
|
|
$ |
35,550 |
|
|
$ |
(22,158 |
) |
|
|
(62.3 |
)% |
In the Branded Services segment, the increase in operating loss to $64.7 million during the nine months ended September 30, 2026, as compared to an operating loss of $17.7 million in the same period in the prior year, was primarily due to lower revenues, as discussed above, the absence of an $8.5 million gain on divestiture and $5.6 million of equity earnings in our European joint venture recognized in the prior year period, and an allocated $2.9 million long-lived asset impairment, partially offset by lower cost of revenues of $100.9 million, primarily on lower labor costs, lower selling, general and administrative expenses of $18.1 million, primarily on lower restructuring, reorganization and transformation-related expenses, and lower depreciation and amortization of $1.2 million.
29
In the Experiential Services segment, the increase in operating income to $45.4 million during the nine months ended September 30, 2026, as compared to $28.3 million in the same period in the prior year, was primarily due to higher revenues, as discussed above, partially offset by higher cost of revenues of $169.4 million, primarily on higher variable direct labor costs and shared services costs, higher selling, general and administrative expenses of $2.5 million, higher depreciation of $1.9 million and an allocated $2.9 million long-lived asset impairment charge.
In the Retailer Services segment, the increase in operating income to $32.7 million during the nine months ended September 30, 2026, as compared to $24.9 million in the same period in the prior year, was primarily due to lower selling, general and administrative expenses of $8.8 million, primarily on lower restructuring, reorganization and transformation-related expenses, and higher revenues, as discussed above, partially offset by higher cost of revenues of $15.4 million, primarily on higher variable direct labor costs, an allocated $2.3 million long-lived asset impairment charge and higher depreciation expense of $1.4 million.
Interest Expense, net
Interest expense, net increased by $8.4 million to $113.5 million for the nine months ended September 30, 2026, from $105.1 million for the same period in the prior year. The increase was driven primarily by a higher average borrowing rate during the nine months ended September 30, 2026 as compared to the same period in the prior year, partially offset by a lower average debt balance outstanding, both of which are significantly driven by the refinancing of our outstanding debt in the first quarter of 2026. Additional information regarding the debt refinancing is included in “Liquidity and Capital Resources—Credit Facilities.”
Income from Unconsolidated Investments
Income from unconsolidated investments was $6.0 million for the nine months ended September 30, 2026. Beginning in 2026, our proportionate share of earnings of our equity method investments, including the retained European joint venture, is presented within Other expenses (income) within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. In the nine months ended September 30, 2025, $5.6 million of income from the European joint venture was presented in Operating income within the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
Other Expense, including Debt Fees
Other expense, including debt fees was $26.7 million for the nine months ended September 30, 2026, compared to other income of $0.1 million for the nine months ended September 30, 2025, and consisted of $21.0 million of third-party fees associated with the refinancing and $5.7 million of impairment and loss on non-marketable equity securities.
Provision for Income Taxes
We recognized a provision for income taxes of $38.8 million and a benefit of $3.5 million for the nine months ended September 30, 2026 and 2025, respectively. The year-over-year change primarily reflects an increase in the valuation allowance recorded against the deferred tax asset related to interest expense limitation carryforward and partially offset by an income tax benefit recorded on foreign currency loss on historical branch repatriations for a recently filed election.
30
Reconciliation of Non-GAAP Financial Measures
Non-GAAP Financial Measures
We manage and assess our performance through various means including the use of the financial measures of Adjusted Net (Loss) Income, Adjusted EBITDA and Adjusted EBITDA by Segment. A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is provided elsewhere in this document. These financial measures are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP financial measures are derived from our consolidated and segment financial information but exclude or adjust for certain items that are included in the most directly comparable GAAP measures. We believe these non-GAAP (“Non-GAAP”) financial measures provide investors with additional insight into our operating performance, underlying business trends, and period-over-period comparability. However, these measures are not in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.
We define Adjusted Net (Loss) Income, as net loss adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income that we do not consider indicative of our ongoing operating performance, which may include acquisition and divestiture related expenses, gains and losses; gains and losses on extinguishments of debt; litigation expenses, net of recoveries on matters not representative of our ongoing business; amortization of intangible assets; impairments; incremental expenses on restructuring and reorganization activities associated with certain transformation programs; further adjusted for the related income tax impact associated with these items. A full listing of adjustments to net loss is provided elsewhere in this document.
Adjusted EBITDA consists of net loss before interest, taxes, depreciation and amortization, further adjusted for (i) non-operating income or expense and (ii) the impact of certain non-cash, nonrecurring or other items included in net (loss) income that we do not consider indicative of our ongoing operating performance, which may include acquisition and divestiture related expenses, gains and losses; stock-based compensation expenses; litigation expenses, net of recoveries on matters not representative of our ongoing business; impairments; and incremental expenses on restructuring and reorganization activities associated with certain transformation programs. A full listing of adjustments to net loss is provided elsewhere in this document.
Adjusted EBITDA by Segment consists of operating (loss) income by segment before interest, taxes, depreciation and amortization, further adjusted for the impact of certain non-cash, nonrecurring or other items included in net (loss) income that we do not consider indicative of our ongoing operating performance, which may include acquisition and divestiture related expenses, gains and losses; stock-based compensation expenses; litigation expenses, net of recoveries on matters not representative of our ongoing business; impairments; and incremental expenses on restructuring and reorganization activities associated with certain transformation programs. A full listing of adjustments to operating income (loss) is provided elsewhere in this document.
We present Adjusted Net (Loss) Income, Adjusted EBITDA and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance. These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain non-cash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA. Neither Adjusted Net (Loss) Income, Adjusted EBITDA nor Adjusted EBITDA by Segment should be considered as an alternative for Net (loss) income or operating income (loss), our most directly comparable measures presented on a GAAP basis.
Non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures. Additionally, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore the Company's non-GAAP measures may not be directly comparable to similarly titled measures of other companies.
Adjusted Net (Loss) Income
31
A reconciliation of Adjusted Net Income (Loss) to Net (loss) income is provided in the following table:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
||||
Net (loss) income |
|
$ |
(25,098 |
) |
|
$ |
20,565 |
|
|
$ |
(159,636 |
) |
|
$ |
(66,005 |
) |
|
Debt financing costs (a) |
|
|
666 |
|
|
|
— |
|
|
|
22,196 |
|
|
|
— |
|
|
Impairment of long-lived assets |
|
|
8,091 |
|
|
|
— |
|
|
|
8,091 |
|
|
|
— |
|
|
Impairment of non-marketable equity securities (f) |
|
|
— |
|
|
|
— |
|
|
|
5,000 |
|
|
|
— |
|
|
Equity-based compensation of Karman Topco L.P. (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,524 |
) |
|
Acquisition and divestiture expenses, net of (gains) losses (d) |
|
|
886 |
|
|
|
(8,221 |
) |
|
|
1,956 |
|
|
|
(7,741 |
) |
|
Restructuring expenses (b) |
|
|
418 |
|
|
|
— |
|
|
|
6,762 |
|
|
|
931 |
|
|
Reorganization and transformation-related expenses (c) |
|
|
5,949 |
|
|
|
9,775 |
|
|
|
16,891 |
|
|
|
38,445 |
|
|
Litigation expenses, net of recoveries (e) |
|
|
2,172 |
|
|
|
50 |
|
|
|
2,927 |
|
|
|
963 |
|
|
Amortization of intangible assets |
|
|
42,272 |
|
|
|
42,918 |
|
|
|
126,856 |
|
|
|
128,752 |
|
|
Gain on repurchases of Term Loan Facility and Notes (i) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,624 |
) |
|
Other |
|
|
706 |
|
|
|
312 |
|
|
|
706 |
|
|
|
902 |
|
|
Tax adjustments related to non-GAAP adjustments (j) |
|
|
(15,196 |
) |
|
|
(11,438 |
) |
|
|
(48,590 |
) |
|
|
(40,764 |
) |
|
Adjusted Net Income (Loss) |
|
$ |
20,866 |
|
|
$ |
53,961 |
|
|
$ |
(16,841 |
) |
|
$ |
52,335 |
|
|
|
|
Adjusted EBITDA
Reconciliations of Adjusted EBITDA to Net (loss) income are provided in the following table:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net (loss) income |
|
$ |
(25,098 |
) |
|
$ |
20,565 |
|
|
$ |
(159,636 |
) |
|
$ |
(66,005 |
) |
Interest expense, net |
|
|
38,758 |
|
|
|
34,954 |
|
|
|
113,520 |
|
|
|
105,128 |
|
Income tax (benefit) expense |
|
|
(6,363 |
) |
|
|
(15,250 |
) |
|
|
38,777 |
|
|
|
(3,490 |
) |
Depreciation and amortization |
|
|
51,014 |
|
|
|
50,743 |
|
|
|
153,856 |
|
|
|
151,802 |
|
Impairment of long-lived assets |
|
|
8,091 |
|
|
|
— |
|
|
|
8,091 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
5,919 |
|
|
|
7,415 |
|
|
|
15,097 |
|
|
|
20,483 |
|
Debt financing costs (a) |
|
|
666 |
|
|
|
— |
|
|
|
21,018 |
|
|
|
— |
|
Restructuring expenses (b) |
|
|
418 |
|
|
|
— |
|
|
|
6,762 |
|
|
|
931 |
|
Reorganization and transformation-related expenses (c) |
|
|
5,949 |
|
|
|
9,775 |
|
|
|
16,891 |
|
|
|
38,445 |
|
Acquisition and divestiture expenses, net of (gains) losses (d) |
|
|
886 |
|
|
|
(8,221 |
) |
|
|
1,956 |
|
|
|
(7,741 |
) |
Litigation expenses, net of recoveries (e) |
|
|
2,172 |
|
|
|
50 |
|
|
|
2,927 |
|
|
|
963 |
|
Impairment of non-marketable equity securities (f) |
|
|
— |
|
|
|
— |
|
|
|
5,000 |
|
|
|
— |
|
COVID-19 government relief payments received |
|
|
— |
|
|
|
(5,008 |
) |
|
|
— |
|
|
|
(5,723 |
) |
Equity-based compensation of Karman Topco L.P. (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,524 |
) |
EBITDA for economic interests in investments (h) |
|
|
2,259 |
|
|
|
4,219 |
|
|
|
3,994 |
|
|
|
9,971 |
|
Other |
|
|
706 |
|
|
|
312 |
|
|
|
706 |
|
|
|
902 |
|
Adjusted EBITDA |
|
$ |
85,377 |
|
|
$ |
99,554 |
|
|
$ |
228,959 |
|
|
$ |
244,142 |
|
32
Financial information by segment, including a reconciliation of Adjusted EBITDA by Segment to operating (loss) income, the closest GAAP financial measure, is provided in the following table:
Branded Services segment |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating (loss) income |
|
$ |
(24,620 |
) |
|
$ |
8,196 |
|
|
$ |
(64,741 |
) |
|
$ |
(17,666 |
) |
Depreciation and amortization |
|
|
30,879 |
|
|
|
31,487 |
|
|
|
93,275 |
|
|
|
94,511 |
|
Impairment of long-lived assets |
|
|
2,855 |
|
|
|
— |
|
|
|
2,855 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
2,533 |
|
|
|
3,066 |
|
|
|
5,734 |
|
|
|
7,607 |
|
Restructuring expenses (b) |
|
|
418 |
|
|
|
— |
|
|
|
5,893 |
|
|
|
358 |
|
Reorganization and transformation-related expenses (c) |
|
|
1,723 |
|
|
|
4,410 |
|
|
|
5,658 |
|
|
|
17,130 |
|
Acquisition and divestiture expenses, net of (gains) losses (d) |
|
|
254 |
|
|
|
(8,399 |
) |
|
|
1,245 |
|
|
|
(8,015 |
) |
Litigation expenses, net of recoveries (e) |
|
|
172 |
|
|
|
324 |
|
|
|
357 |
|
|
|
1,258 |
|
COVID-19 government relief payments received |
|
|
— |
|
|
|
(1,646 |
) |
|
|
— |
|
|
|
(1,891 |
) |
Equity-based compensation of Karman Topco L.P. (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
375 |
|
EBITDA for economic interests in investments (h) |
|
|
3,390 |
|
|
|
4,219 |
|
|
|
9,987 |
|
|
|
9,971 |
|
Branded Services segment Adjusted EBITDA |
|
$ |
17,604 |
|
|
$ |
41,657 |
|
|
$ |
60,263 |
|
|
$ |
103,638 |
|
Experiential Services segment |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating income |
|
$ |
15,190 |
|
|
$ |
20,912 |
|
|
$ |
45,402 |
|
|
$ |
28,267 |
|
Depreciation and amortization |
|
|
11,279 |
|
|
|
10,744 |
|
|
|
33,902 |
|
|
|
31,965 |
|
Impairment of long-lived assets |
|
|
2,940 |
|
|
|
— |
|
|
|
2,940 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
1,316 |
|
|
|
1,991 |
|
|
|
3,990 |
|
|
|
5,630 |
|
Restructuring expenses (b) |
|
|
— |
|
|
|
— |
|
|
|
475 |
|
|
|
186 |
|
Reorganization and transformation-related expenses (c) |
|
|
2,348 |
|
|
|
3,285 |
|
|
|
6,194 |
|
|
|
9,662 |
|
Acquisition and divestiture expenses, net of (gains) losses (d) |
|
|
352 |
|
|
|
86 |
|
|
|
396 |
|
|
|
160 |
|
Litigation expenses, net of recoveries (e) |
|
|
2,000 |
|
|
|
123 |
|
|
|
2,382 |
|
|
|
451 |
|
COVID-19 government relief payments received |
|
|
— |
|
|
|
(1,821 |
) |
|
|
— |
|
|
|
(2,069 |
) |
Equity-based compensation of Karman Topco L.P. (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(976 |
) |
Experiential Services segment Adjusted EBITDA |
|
$ |
35,425 |
|
|
$ |
35,320 |
|
|
$ |
95,681 |
|
|
$ |
73,276 |
|
Retailer Services segment |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating income |
|
$ |
16,968 |
|
|
$ |
11,052 |
|
|
$ |
32,731 |
|
|
$ |
24,949 |
|
Depreciation and amortization |
|
|
8,856 |
|
|
|
8,512 |
|
|
|
26,679 |
|
|
|
25,326 |
|
Impairment of long-lived assets |
|
|
2,296 |
|
|
|
— |
|
|
|
2,296 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
2,070 |
|
|
|
2,358 |
|
|
|
5,373 |
|
|
|
7,246 |
|
Restructuring expenses (b) |
|
|
— |
|
|
|
— |
|
|
|
394 |
|
|
|
387 |
|
Reorganization and transformation-related expenses (c) |
|
|
1,878 |
|
|
|
2,080 |
|
|
|
5,039 |
|
|
|
11,653 |
|
Acquisition and divestiture expenses, net of (gains) losses (d) |
|
|
280 |
|
|
|
92 |
|
|
|
315 |
|
|
|
114 |
|
Litigation expenses, net of recoveries (e) |
|
|
— |
|
|
|
24 |
|
|
|
188 |
|
|
|
239 |
|
COVID-19 government relief payments received |
|
|
— |
|
|
|
(1,541 |
) |
|
|
— |
|
|
|
(1,763 |
) |
Equity-based compensation of Karman Topco L.P. (g) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(923 |
) |
Retailer Services segment Adjusted EBITDA |
|
$ |
32,348 |
|
|
$ |
22,577 |
|
|
$ |
73,015 |
|
|
$ |
67,228 |
|
|
|
33
(a) |
|
Debt financing costs, as reported in "Other expense, including debt fees" in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, represent the portion of debt financing costs incurred in connection with the refinancing of our 2030 Notes and 2030 Term Loan Facility. |
|
(b) |
|
Restructuring expenses represent employee and contract termination expenses associated with changes in business operation and strategy. In the three and nine months ended September 30, 2026, ($0.5) and $2.5 million of contract termination charges were charged to "Cost of revenues" in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. For all other periods presented, the remaining restructuring expenses were reported in "Selling, general and administrative expenses" in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. |
|
(c) |
|
Reorganization and transformation-related expenses represent professional fees associated internal reorganization activities, incremental and nonrecurring implementation costs associated with our multi-year global ERP transformation, and setup costs associated with transitioning certain support activities to third-party outsourcing providers. |
|
(d) |
|
Acquisition and divestiture expenses, net of (gains) losses on disposal represent fees and other expenses associated with activities related to acquisitions and divestitures, including (gains) or losses on business sales along with adjustments to the estimated fair value of contingent consideration or adjustments to working capital. |
|
(e) |
|
Litigation expenses, net of recoveries represent legal expenses, including costs associated with investigation and remediation activities, and estimated settlement reserves, net of recoveries from responsible parties and/or insurance providers that are not representative of our ongoing business operations. |
|
(f) |
|
Impairment of non-marketable equity securities, as reported in "Other expense, including debt fees" in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, represents a non-cash fair value adjustment associated with a minority investment in a technology-enabled retail support company. |
|
(g) |
|
Equity-based compensation of Karman Topco L.P. represents non-cash changes in the estimated value of certain stock units due to investors of Advantage Solutions, Inc. |
|
(h) |
|
EBITDA for economic interests in investments represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments. |
|
(i) |
|
Represents a gain associated with the repurchases of Term Loan Facility and Notes, net of deferred financing fees related to repricing of Term Loan Facility. |
|
(j) |
|
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. |
|
34
Liquidity and Capital Resources
Operating cash flow, as supplemented by the divestiture of non-core businesses identified over our transformation period, provides the primary source of cash to fund operating needs, capital expenditures and debt service. Excess cash is used to fund debt repurchases and share repurchases.
Our working capital as of September 30, 2026 was $371.4 million, compared to $540.0 million as of December 31, 2025, and included $131.3 million of cash and cash equivalents and $609.5 million of accounts receivable, net of allowance for expected credit losses, both of which will be a significant source of ongoing liquidity. The decrease in working capital primarily reflects the decrease in cash and cash equivalents, which resulted from $124.9 million of debt repayments and $34.9 million of fees paid in connection with the Refinancing, scheduled principal payments of $19.4 million, and share repurchases of $19.3 million, partially offset by cash provided by operating activities, as well as increases in other accrued expenses and in the current portion of long-term debt and a decrease in prepaid expenses and other current assets. As of September 30, 2026, we had the ability to borrow up to $395.7 million under our 2030 ABL after consideration of the borrowing base limitations and outstanding letters of credit.
We believe our cash on hand, cash flows from operations and current and possible future credit facilities will be sufficient to satisfy our working capital requirements, purchase commitments, debt service requirements, restructuring and transformation initiatives, capital expenditures, and other financing requirements for at least the next twelve months and for the foreseeable future thereafter.
Cash Flows
A summary of our cash operating, investing and financing activities are shown in the following table:
|
|
Nine Months Ended September 30, |
|
|||||
(in thousands) |
|
2026 |
|
|
2025 |
|
||
Net cash provided by operating activities |
|
$ |
68,234 |
|
|
$ |
15,902 |
|
Net cash provided by investing activities |
|
|
4,132 |
|
|
|
8,827 |
|
Net cash used in financing activities |
|
|
(180,336 |
) |
|
|
(32,410 |
) |
Net effect of foreign currency changes on cash, cash equivalents and restricted cash |
|
|
(1,592 |
) |
|
|
178 |
|
Net change in cash, cash equivalents and restricted cash |
|
$ |
(109,562 |
) |
|
$ |
(7,503 |
) |
Cash, cash equivalents and restricted cash decreased $109.6 million during the nine months ended September 30, 2026, primarily as a result of the use of cash for the Refinancing, scheduled principal payments and share repurchases. Cash, cash equivalents and restricted cash increased $29.0 million during the third quarter.
Net Cash Provided by Operating Activities
Cash provided by operating activities during the nine months ended September 30, 2026 was $68.2 million compared to cash provided by operating activities of $15.9 million during the nine months ended September 30, 2025, representing an increase of $52.3 million. The increase primarily reflects $101.5 million of favorable changes in operating assets and liabilities and $2.9 million of distributions received from equity method investments, partially offset by $52.1 million lower cash generated before changes in operating assets and liabilities. The favorable changes in operating assets and liabilities were primarily a $48.8 million decrease in prepaid expenses and other assets, compared to a $1.9 million increase in the prior year period, a $30.8 million favorable change in other accrued expenses and other liabilities, an $17.0 million smaller decrease in accrued compensation and benefits, and a $12.9 million smaller increase in accounts receivable, partially offset by an $11.6 million decrease in deferred revenue. Cash payments during the nine months ended September 30, 2026 included $96.8 million of interest, $34.5 million of income taxes, and $23.1 million of reorganization and restructuring costs.
Cash provided by operating activities during the nine months ended September 30, 2025 was $15.9 million, and reflects $82.7 million of cash generated before changes in operating assets and liabilities, partially offset by $66.8 million of unfavorable changes in operating assets and liabilities. The unfavorable changes in operating assets and liabilities were primarily a $32.9 million decrease in accrued compensation and benefits, a $30.1 million increase in accounts receivable,
35
and an $18.4 million decrease in other accrued expenses and other liabilities, partially offset by a $10.2 million increase in accounts payable and a $6.2 million increase in deferred revenue. Cash payments during the nine months ended September 30, 2025 included $98.0 million of interest, $16.7 million of income taxes, and $44.1 million of reorganization and restructuring costs.
Net Cash Provided by Investing Activities
Net cash provided by investing activities during the nine months ended September 30, 2026 primarily consisted of $27.5 million in deferred proceeds from the sale of Jun Group completed in 2024 and $13.9 million cash received for sales of equity method and other investments. These cash inflows were partially offset by purchases of property and equipment of $31.2 million, primarily driven by investments in software, including our enterprise resource planning systems, and purchases of investments in unconsolidated affiliates of $6.1 million.
Net cash provided by investing activities during the nine months ended September 30, 2025 primarily consisted of $22.5 million in deferred proceeds from the sale of Jun Group and $18.6 million in cash received for the sale of equity method investments. These cash inflows were partially offset by the purchase of property and equipment of $28.7 million, primarily driven by investments in software, including our enterprise resource planning systems, which includes upgrading our information system platform, and the purchase of investments in unconsolidated affiliates of $3.6 million.
Net Cash Used in Financing Activities
Cash flows used in financing activities during the nine months ended September 30, 2026 were primarily related to $124.9 million for repayment of the 6.5% Senior Secured Notes and the Term Loan Facility debt; $13.9 million payment of deferred financing fees in connection with the Refinancing (as defined below); $19.4 million for three quarterly principal payments for the 2030 Term Loan Facility; $19.3 million for payments related to the 2021 Share Repurchase Program (as defined below); and $4.6 million for payments for taxes related to net share settlement of equity awards. During the nine months ended September 30, 2026, we borrowed and repaid $170.0 million under the 2030 ABL, and no amounts were outstanding as of September 30, 2026.
Cash flows used in financing activities during the nine months ended September 30, 2025 were primarily related to $18.2 million of repurchases of 6.5% Senior Secured Notes, repayment of principal on the Term Loan Facility of $9.9 million, and payments for taxes related to net share settlement of $3.7 million.
Credit Facilities
During the first quarter of 2026, we completed, through our indirect wholly-owned subsidiary, Advantage Sales & Marketing Inc. (the “Borrower”), a refinancing transaction (the “Refinancing”) designed to extend maturities and modify our capital structure, which is more fully described in Note 4—Debt to the condensed consolidated financial statements. As of September 30, 2026, we had $395.7 million of unused availability under our 2030 ABL after giving effect to borrowing base limitations and $62.0 million of outstanding letters of credit. As of September 30, 2026, we had $1,578.6 million of principal outstanding under our debt agreements, compared to $1,687.8 million as of December 31, 2025, and the decrease reflects $144.3 million of repayments, partially offset by $35.1 million of payment-in-kind fees added to principal. As of September 30, 2026, we were in compliance with all applicable covenants. The fixed charge coverage ratio covenant under the 2030 ABL is tested only when excess availability falls below the greater of $25 million and 10% of the lesser of the borrowing base and the maximum borrowing capacity, and was not in effect as of September 30, 2026.
From time to time, the Borrower may repurchase portions of its outstanding indebtedness under the 2030 Term Loan Facility and 2030 Notes. Such repurchases, if any, will depend upon prevailing market conditions, our liquidity and capital position, contractual limitations and other factors. The amounts and timing of any such repurchases will be at our discretion and we are under no obligation to repurchase any specific amount of indebtedness.
Share Repurchases
On November 9, 2021, we announced that our board of directors authorized a share repurchase program (the “2021 Share Repurchase Program”) pursuant to which we may repurchase up to $100.0 million of our Class A common stock.
The 2021 Share Repurchase Program does not have an expiration date, but provides for suspension or discontinuation
36
at any time. The 2021 Share Repurchase Program permits the repurchase of our Class A common stock on the open market and by other means from time to time. The timing and amount of any share repurchase is subject to prevailing market conditions, relevant securities laws and other considerations, and we are under no obligation to repurchase any specific number of shares.
During the three and nine months ended September 30, 2026, we purchased through the open market and in a private transaction approximately $2.3 million and $19.3 million, respectively, of our Class A common stock under the 2021 Share Repurchase Program. During the nine months ended September 30, 2026, we retired 566,408 treasury shares that had been previously purchased under the 2021 Share Repurchase Program. As of September 30, 2026, there remained $27.0 million of share repurchase availability under the 2021 Share Repurchase Program.
Future Cash Requirement
Other than the extension of debt maturities resulting from the Refinancing and an increase in required quarterly principal payments under the 2030 Term Loan Facility to approximately $6.5 million from $3.3 million under the previous terms of the Borrower's term loan facility, and the items described below, there were no material changes to our contractual future cash requirements from those disclosed in our 2025 Annual Report. Our cash interest requirements increased as a result of the Refinancing. The 2030 Notes bear interest at 9.0%, or approximately $50.5 million annually, payable on May 15 and November 15, and the 2030 Term Loan Facility bears interest at SOFR plus 6.00%. We also expect to make cash payments in connection with the strategic realignment initiative announced subsequent to September 30, 2026, including employee severance, lease terminations and other contract exit costs, which we estimate at approximately $7.0 million to $10.0 million, and may make payments in connection with the exit of the HCM vendor contract in an amount to be determined if we choose an alternative path. See Note 9—Restructuring to our accompanying unaudited condensed consolidated financial statements.
Cash and Cash Equivalents Held Outside the United States
As of September 30, 2026 and December 31, 2025, $20.1 million and $14.0 million, respectively, of our cash and cash equivalents were held by foreign subsidiaries. As of September 30, 2026, and December 31, 2025, $43.5 million and $37.9 million, respectively, of our cash and cash equivalents were held by foreign branches.
We assessed our determination as to our indefinite reinvestment intent for our foreign subsidiaries and branches and recorded a deferred tax liability of approximately $1.2 million of withholding tax as of September 30, 2026 for unremitted earnings in Canada and China. Our assertion for China was lifted during the current quarter and now we have lifted our indefinite reinvestment assertions on earnings of all our foreign operations.
Off-Balance Sheet Arrangements
We do not have any off‑balance‑sheet financing arrangements or liabilities, including guarantee contracts, retained or contingent interests in transferred assets, or obligations arising from material variable interests in unconsolidated entities that would require disclosure under applicable accounting guidance. We do not have any majority‑owned subsidiaries that are not included in its condensed consolidated financial statements. Additionally, we do not have material interests in, or relationships with, special‑purpose entities.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are included in our 2025 Annual Report and did not materially change during the nine months ended September 30, 2026.
Recently Issued Accounting Pronouncements
Accounting Standards Recently Issued but Not Yet Adopted by the Company
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires public entities to disclose additional information about specific expense categories in the notes to the financial statements
37
on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted on a prospective or retrospective basis. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs to reflect incremental and iterative development methods. The amendments remove prescriptive development stages and require capitalization of software costs once management has authorized and committed to funding the project and it is probable the project will be completed and the software will be used as intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those years, with early adoption permitted and application on a prospective, modified retrospective, or retrospective basis. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements and related disclosures.
Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.
38
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Risk
Our exposure to foreign currency exchange rate fluctuations is primarily the result of foreign subsidiaries and foreign branches. As needed, we use financial derivative instruments to hedge foreign currency exchange rate risks associated with our operations.
The assets and liabilities of our foreign subsidiaries and foreign branches, whose functional currencies are primarily Canadian dollars, are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. The cumulative translation effects for subsidiaries using a functional currency other than the U.S. dollar are included in accumulated other comprehensive loss as a separate component of stockholders’ equity. We estimate that had the exchange rate in each country unfavorably changed by ten percent relative to the U.S. dollar, our consolidated loss before taxes would have increased by approximately $3.5 million for the nine months ended September 30, 2026.
Interest Rate Risk
Interest rate exposure relates primarily to the effect of changes in SOFR on borrowings under the 2030 Term Loan Facility and the 2030 ABL. The 2030 Notes bear a fixed rate of 9.0%, so changes in market rates affect their fair value but not our interest expense.
We manage our interest rate risk through the use of derivative financial instruments. Specifically, we have entered into interest rate collar agreements to manage our exposure to potential interest rate increases that may result from fluctuations in SOFR. We do not designate these derivatives as hedges for accounting purposes, and as a result, all changes in the fair value of derivatives, used to hedge interest rates, are recorded in “Interest expense, net” in our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.
We have interest rate collar contracts with an aggregate notional value of principal of $500.0 million as of September 30, 2026, from various financial institutions to manage our exposure to interest rate movements on variable rate credit facilities. In April 2026, we entered into one interest rate collar contract with a notional value of principal of $100.0 million. This interest rate collar will mature on April 8, 2029. In July 2024, we entered into two interest rate collar contracts with a notional value of principal of $200.0 million each. The interest rate collar contracts are effective December 16, 2024 and will mature on April 5, 2027 and 2028. The aggregate fair value of our interest rate collars represented an outstanding net asset of $1.8 million as of September 30, 2026.
In October 2026, we entered into a $50.0 million pay-fixed (4.729%) interest rate swap maturing October 15, 2029, not designated as a hedge for accounting purposes. Including the swap, $50.0 million of our variable-rate debt is effectively fixed, $500.0 million is subject to collars that limit one-month Term SOFR to between 2.49%–2.89% and 4.50%–5.00%, and approximately $465.2 million remains fully exposed to changes in SOFR. With other variables held constant, and based on balances and hedges in place as of October 2026, a 100-basis-point increase in SOFR would increase annual interest expense by approximately $9.2 million, compared with $10.2 million without these hedges. For larger increases, the collar caps limit SOFR on $500.0 million of borrowings.
In the future, to manage our interest rate risk, we may refinance existing debt, enter into additional interest rate swaps, collars or caps, or modify existing derivative agreements. We do not enter into derivative transactions for speculative purposes.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
39
In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 30, 2026, the Company continued enhancements related to the phased implementation of its global enterprise resource planning (“ERP”) system. These activities primarily related to ongoing configuration and integration in relation to phases completed in the third quarter of 2026, and preparatory work in advance of future phases of deployment. The initial deployment was completed in fiscal year 2025 and enhancements to support more complex transaction flows and reporting requirements are expected to continue during fiscal year 2026.
The Company evaluated the impact of these activities as part of its ongoing assessment of internal control over financial reporting and will continue to monitor the design and operating effectiveness of relevant controls as additional phases of the ERP system are implemented. Except for the foregoing, there were no changes in the Company’s internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various legal matters that arise in the ordinary course of our business. Some of these legal matters purport or may be determined to be class and/or representative actions, or seek substantial damages or penalties. Some of these legal matters relate to disputes regarding acquisitions. In connection with certain of the below matters and other legal matters, we have accrued amounts that we believe are appropriate. There can be no assurance, however, that the below matters and other legal matters will not result in us having to make payments in excess of such accruals or that the below matters or other legal matters will not materially or adversely affect our business, financial position, results of operations, or cash flows.
Commercial Matters
We have been involved in various litigation matters and arbitrations with respect to commercial matters arising with clients, vendors and various third-parties.
Employment-Related Matters
We have also been involved in various litigation, including purported class or representative actions with respect to matters arising under the U.S. Fair Labor Standards Act, California Labor Code and Private Attorneys General Act. Many involve allegations for allegedly failing to pay wages and/or overtime, failing to provide meal and rest breaks and failing to pay reporting time pay, failing to reimburse for certain expenses, waiting time penalties and other penalties.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed under Part I, Item 1A “Risk Factors” in the 2025 Annual Report, the current effects of which are discussed in more detail in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. These risks are not the only risks that may affect us. Additional risks that we are not aware of or do not believe are material at the time of this filing may also become important factors that adversely affect our business.
40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth repurchases of our Class A common stock during the three months ended September 30, 2026:
Period |
|
Total number of shares purchased |
|
|
Average price paid per share |
|
|
Total number of shares purchased as part of publicly announced plans |
|
|
Approximate dollar value of shares that may yet be purchased under the plan (in thousands) (1) |
|
||||
July 1, 2026 to July 31, 2026 |
|
|
19,442 |
|
|
$ |
39.74 |
|
|
|
19,442 |
|
|
$ |
28,375 |
|
August 1, 2026 to August 31, 2026 |
|
|
20,197 |
|
|
$ |
32.52 |
|
|
|
20,197 |
|
|
$ |
27,719 |
|
September 1, 2026 to September 30, 2026 |
|
|
21,909 |
|
|
$ |
32.62 |
|
|
|
21,909 |
|
|
$ |
27,004 |
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended September 30, 2026, none of our directors and executive officers
41
ITEM 6. Exhibits
The following exhibits are filed with this Report:
|
|
|
|
Incorporated by Reference |
||||||
Exhibit No. |
|
Description |
|
Form |
|
File No. |
|
Exhibit |
|
Filing Date |
|
|
|
|
|
|
|
|
|
|
|
31.1+ |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2+ |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1** |
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2** |
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+ Filed herewith. ** Furnished herewith and not “filed” for purposes of Section 18 of the Exchange Act.
|
||||||||||
***
42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ADVANTAGE SOLUTIONS INC. |
||
|
|
|
By: |
|
/s/ David Peacock |
|
|
David Peacock |
|
|
Chief Executive Officer (Principal Executive Officer) |
Date: |
|
November 4, 2026 |
|
|
|
By: |
|
/s/ Christopher Growe |
|
|
Christopher Growe |
|
|
Chief Financial Officer (Principal Financial Officer) |
Date: |
|
November 4, 2026 |
43