Advantage Solutions at Canaccord Genuity: Strategic Transformation in Focus

On Tuesday, 12 August 2025, Advantage Solutions (NASDAQ:ADV) presented a strategic overview at Canaccord Genuity’s 45th Annual Growth Conference. CEO Dave Peacock highlighted the company’s recovery from a challenging Q1 and its focus on operational transformation. While Advantage Solutions is optimistic about its future growth, it continues to face challenges in system integration and staffing.

Key Takeaways

• Advantage Solutions reported sequential improvement in Q2 from a difficult Q1.
• The company is focusing on operational transformation, including re-segmentation and IT enhancements.
• Debt repayment remains a priority, with a significant reduction since 2019.
• The experiential marketing segment is a key growth driver, fueled by increased demand.
• Advantage Solutions aims to improve employee retention and productivity through better scheduling.

Financial Results

• Q2 saw improvement over Q1, with the company reiterating its annual guidance.
• Advantage Solutions expects a 30% net free cash flow yield in the second half of the year.
• The company has reduced its net debt by $400 million since 2019 and aims to reduce net debt to under 3.5 times.
• Capital expenditure for the year will be lower than expected, with plans to return to historical levels next year.

Operational Updates

• The company has re-segmented its business to be more customer-focused and sold off non-core businesses.
• Advantage Solutions is leveraging AI for labor deployment and assortment optimization.
• Implementation of Workday is planned for 2026 to improve business management.
• The retirement of 25% of legacy systems is expected by the end of the year.

Future Outlook

• Advantage Solutions is optimistic about meeting its guidance and expects continued growth in the experiential segment.
• The company aims to generate significant free cash flow and reduce net debt, potentially allowing for share repurchase, dividends, or M&A in the future.

Q&A Highlights

• CEO Dave Peacock emphasized the priority of debt repayment and the goal to reduce leverage.
• Advantage Solutions is not primarily focused on SaaS technology but sees potential in developing transferable capabilities.

For a detailed understanding of Advantage Solutions’ strategic initiatives and financial performance, refer to the full transcript below.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Joe Vafi, Equity Research Analyst, Canaccord: Alright. Alright. We’re gonna keep going here at, the Canaccord forty fifth annual growth conference. I’m Joe Vafi, one of the equity research analysts here. And we’re, pleased to have with us up next the team from Advantage Solutions, Dave Peacock, who is CEO Chris Growe, who is the CFO, sitting over here.

Advantage is somewhat unique play in the public market setting, providing key services into CPG, grocery retail industries, and does so as a market leader in its segments. But even as something of an industry juggernaut in its markets, Advantage is still on its own journey to generate more shareholder value. Almost three years ago, David and Chris came to Advantage and with a strategy to refocus the company on some of its core markets after what had previously been a period of active PE sponsored consolidation. So here to talk more about Advantage with us is Dave. And so thanks for being here with us today.

Dave Peacock, CEO, Advantage Solutions: Of course, Joe.

Joe Vafi, Equity Research Analyst, Canaccord: Yeah. Great. So why don’t we just start off and maybe you just introduce Advantage to those here in the audience that may not know it in your own words, the value prop you’re bringing to your customers.

Dave Peacock, CEO, Advantage Solutions: Yeah, absolutely. We are in the business of driving sales for less. So we sit between thousands of consumer products companies and manufacturers and hundreds and hundreds of retailers. And we perform services ranging from literally selling on behalf of the CPGs or representing them if they’re contract manufacturers to retailers. We do retail merchandising for both CPGs and retailers, and we’re the leading experiential marketing agency in the country.

Great.

Joe Vafi, Equity Research Analyst, Canaccord: You just came off your q two numbers, I believe Yes. A week ago. Maybe, you know, I know there were some positive highlights. The stock acted pretty well off that. You reiterated your guidance for the year.

And maybe drill down just a little bit into what you saw in the quarter and maybe what you’re seeing here in your end markets a little bit.

Dave Peacock, CEO, Advantage Solutions: Yeah. I think, one, we saw sequential improvement from first quarter. We had a difficult first quarter like a lot of companies that are in our sector. And I think what you saw with the consumer sector overall is a difficult first quarter and adjusting to a lot of the uncertainty they introduced into the market. But ultimately, one, the market improved a bit because some of the things that were contemplated didn’t roll through some of the tariffs, what have you.

And I think companies figured out a little bit how to manage in that uncertain time. So we’re no different. And I think the other thing that we really saw some real improvement. We have a large labor business, 70,000,000 labor hours, over 60,000 frontline personnel. We had some challenges in just you know, hiring talent and getting our business staffed in the first quarter.

And all of that was improved in the second quarter where execution rates were quite high.

Joe Vafi, Equity Research Analyst, Canaccord: Great. And you’ve also not only focused on your go to market, but you’ve kind of been on a transformational journey on an operational side internally. So maybe you kind of update, you know, the audience here on what you’ve been doing, the progress to date, and what the benefits that you’re expecting to generate on those efforts over the next year or two.

Dave Peacock, CEO, Advantage Solutions: Yeah, absolutely. So for the last year and a half, we’ve embarked on a transformation journey where re segmented our business to be more focused based on customer. We sold off businesses where we didn’t feel we had a right to win and focused our portfolio and really unified the company into kind of more of an interconnected service platform across the consumer sector. We also improved our data and analytics business, our data analytics capabilities and became much more tech enabled. And that ranges all over our company from how our sales force actually sells and the information and data that we provide them real time and the speed at which we provide it to how we’re scheduling teammates using AI in the marketplace more efficiently and in a way that is driving better retention.

And then we also wanted to bring the efficiency into our business. And so we have consolidated our shared services in our back office and invested in our technology infrastructure and our ERP. We’re implementing workdays as we go into 2026, for instance. All the foundational systems that enable you to just better manage your business with with more efficiency. Sure.

And CPG and, I guess, to

Joe Vafi, Equity Research Analyst, Canaccord: a certain degree, retail grocery retail, it’s can be extremely data driven. Right? I know you’re building a big data lake. And with your size and scale, the introduction of AI with a lot of the investments you’re making, it does feel like you have a an opportunity to really drive more value for your customers, even extend the product and service offerings you have for them? Just curious to hear kind of what perhaps you’re thinking about as kind of the next evolution of your service offering using these data and some of these tools?

Dave Peacock, CEO, Advantage Solutions: No, I think it’s a good question. So AI use cases stem from a robust data set that’s segregated appropriately. And that’s where our data lake comes into play. And that data lake is industry leading, especially in the industry we’re in and exceeds the capabilities of many of our clients. We ingest enormous amounts of data as you can imagine.

Syndicated data, client data, in store execution data and are able to take that and really leverage it to just make better decisions in the marketplace. Whether it’s in the deployment of labor in support of our clients or in selling on their behalf and making sure that the assortments for the retailers are optimized for maximum movement within their categories. And we have found really, really great outcomes so far. We talked about in the quarter that our CapEx was lower than people expected, and this is just an example. And that the CapEx for the year will be lower.

And part of that is because we’ve been able to bring AI into the development of our IT and deployment. None of this would occurred if we had not made the investments that we made last year and earlier this year.

Joe Vafi, Equity Research Analyst, Canaccord: That’s great. And then I know you mentioned, you know, your very large workforce. Is it 300? How how big is the workforce?

Dave Peacock, CEO, Advantage Solutions: So our workforce, we we have about 66,000 teammates right now, but but about, call it, low fifth or high fifties, call it 58, 60,000 frontline. They’re working in stores.

Joe Vafi, Equity Research Analyst, Canaccord: So 58 to 60,000 employees. I know you’ve been working on utilization and employee of, you know, efficiency and and the like. Just maybe you could kinda because it it feels I mean, that’s your biggest cost bucket. Right? Right.

Sure. Right? Yeah. So perhaps maybe we kind of talk about some of the things you’ve done to put more efficiency into the labor force and what is on the table moving forward. And I mean, theoretically, AI could also help on this side of the business too.

Dave Peacock, CEO, Advantage Solutions: Oh, absolutely. And it already is. So you know, one of the challenges when I go out to the market and I talk to our teammates and ask what are the difficulties in working at Advantage, they say I can’t get enough hours. And so we’re changing our model to be very banner store specific and be more geographic. Where you could work in multiple locations.

To do that, you’ve got to be able to schedule appropriately and understand, okay, where’s the demand for hours and how does that match with the availability And that’s where we’re leveraging AI to do that in a much more efficient way. That should and is driving as we see in a pilot higher retention. Higher retention means lower talent acquisition costs, more tenured and experienced workforce, you get greater productivity in the work that they’re doing. So that’s just one example of how we’re able to take technology and AI, but it’s also in the tasks that they’re doing in store.

So many times, if we’re on the retailer side, they’re merchandising and and we’ve got a team that’s optimizing assortment within various sections of the store. And that obviously is improved and can be done much faster with AI as far as coming through reams and reams of sales data to come back and recommend exactly which items should be located where for optimal movement.

Joe Vafi, Equity Research Analyst, Canaccord: That’s great. And then your third segment, experiential. Excuse me. Experiential is the newest segment, I would say, in a in a certain sense, but it’s also a little bit more of a growth engine for the business right now. Maybe kind of describe the experiential in a little more detail, some of the demand drivers around it, and how that’s growing right now.

Dave Peacock, CEO, Advantage Solutions: Right. So experiential is largely sampling in store but can include some activities for brand activation outside the store. And we’re seeing both sides of that business grow. You’re finding more and more companies looking to engage with consumers more directly, whether that’s outside the store or in the store. And in the store, with all the innovation that’s been coming into the market over the last several years that really increased post COVID.

During COVID, there was a slowdown in new product development, what have you. And so that has a big demand driver for sampling, number one. Number two, you’re seeing a lot of private label growth within the market. And private label growth is a great opportunity for people to sample those products so that they understand that there’s not any diminution relative to the national brand. So we’re seeing those two things as big growth drivers and the demand signals remain strong and continue to be strong through this year.

And what we saw in the second quarter versus the first quarter was the ability to meet that demand more closely with the supply of labor. So we feel very confident as we go into the back half of this year that we’ll continue to see growth in the experiential sector.

Joe Vafi, Equity Research Analyst, Canaccord: Got it. And I mean, would you say that experiential still has I think versus some of your other services, you could say it’s still somewhat underpenetrated. I know pre COVID, you had a good business pretty much rebounded, I think, now to about where it was. And so you’re kind of back to that growth trajectory. Is Could this business be 30% bigger in, I don’t know, seven or eight years, do you think?

Dave Peacock, CEO, Advantage Solutions: I think there’s no reason it can’t continue to grow at a robust pace, meaning ahead of the overall consumer sector and maybe realize growth like you described. Part of it too is a lot of retailers recognize that they need to have a strong e commerce business. They need to have the right assortment to attract the customer they’re seeking. But they have to create an experience in the store. Shoppers are shopping.

It can’t just be aisles and aisles of product and no real experience. They’re looking for, shoppers are that is their consumers, something unique. And we’d know and all our clients know that the conversion of sample to acquisition is very strong. I mean, people who sample typically buy and then their loyalty rate is higher than the average consumer. So you get that kind of lifetime value then of purchases.

So I can see that part of our business continuing to grow for a long time.

Joe Vafi, Equity Research Analyst, Canaccord: Nice. And if you think of CPG brands or others, do you think enough of them are doing this or have a sampling strategy at this point?

Dave Peacock, CEO, Advantage Solutions: Yeah. So it’s a combination. So we’ll work on behalf of CPGs Sample on their behalf. It’s also the retailers. So you’ve got joint business plans that are being developed between CPG manufacturers and retailers.

And the different tools and tactics that are negotiated are pricing and price offs, retail media network investments, but sampling. And so it’s a part of that negotiation. So we have thousands and thousands of CPG clients that are sampling either directly through us or as a byproduct of a joint business plan that’s worked on with the retailer.

Joe Vafi, Equity Research Analyst, Canaccord: Right. Mean, you guys have a big footprint. Are there any I mean, there’s a roadmap to maybe some further product extensions or new markets that may make sense over time or expanding beyond kind of pure grocery retail and other retailers. Yeah. Maybe some of those growth plans or ideas to potentially expand the TAM over time.

Dave Peacock, CEO, Advantage Solutions: That’s right. And there’s healthy TAM right now in our industry because what we do for retailers is really what I’ll call sort of more variable episodic tasks in store. And retailers are struggling to get personnel like anybody else. But we know we can execute those episodic tasks more efficiently than kind of the regular store personnel. And so we’re seeing growth drivers there.

And then the same on our branded business. We know that there’s a strong total addressable market because there’s market share we can pick up. But also, there’s no shortage of new companies coming into the market with new products and looking for representation and selling. And then, yes, we are we’ve got a concerted effort around growing, especially some of the merchandising work we do and reset work that we do in grocery and and sort of your typical food channels with other types of retailers. Great.

Joe Vafi, Equity Research Analyst, Canaccord: And I know you also have some joint ventures out there. And Yeah. I mean, I always ask you this question, David. It feels like you’ve got you’ve got a big employee base. You’ve got brands out there.

You can be a big extension of a lot of these brands, not just in a fee for service model, but in a business partnership. Right?

Dave Peacock, CEO, Advantage Solutions: Correct. And yeah, we’ve explored that a little bit, especially emerging brands. We’ve got great partners. For instance, we partnered with LA Libations who is a leader in the development of emerging brands, primarily in the beverage space. Yep.

And what we’ve done for them is help them scale more quickly. Had a small retail merchandising group, but we can scale that very quickly and and doing so in some of the leading retailers around the around the country. And then other partnerships, you know, we’re leveraging some data from companies like Instacart and have for a while. They’ve gotten a robust data set. That’s part of the data that we ingest into our Mhmm.

And into our data lake. And so those are just a couple examples of how we can partner with others, but basically use their capabilities to apply to what we do.

Joe Vafi, Equity Research Analyst, Canaccord: Sure. Maybe we’ll switch gears and kinda dig into the finances and numbers a little bit. Lots of investment on the IT side. Sounds like the CapEx requirements are a little bit less this year. Maybe kind of dig into, you know, what the benefits are, a year or two years from now from those IT and business process investments in terms of maybe margin and or cash flow?

Dave Peacock, CEO, Advantage Solutions: Yeah. And I’ll speak to it in cash flow. So we’ve been, I mentioned embarking upon a transformation. And our transformation investment, especially on the technology side where it’s a little more capital intense, begins to trail off as we work to the back half of this year. And we’ve already talked about next year, we envision our CapEx to be close to what historical levels have been, maybe slightly above but not much.

And then we’ve had transformation expenses in our adjusted EBITDA that will be half this year of what they were last year and they will be half next year of what they were this year. Right. So they’re continuing to come down. And we actually see because of the IT investments we’ve made that our ongoing CapEx will likely be kind of beyond 26 below historic levels because, you know, as I always say, if you buy a new car, you shouldn’t have to take it in for maintenance for the first few years. So we’ve got a lot of new systems that we’re leveraging against our business.

And we’ve retired about a 100 of so about 25% of our legacy systems. We will by the end of this year. And that’s one of the things that is really important. As you bring on new systems, you should be able to take out boundary systems because what you’ve acquired is is more modern and can handle more than what your your previous ERP system, for instance, could. So as you retire those systems, it’s lower maintenance cost, lower overall IT expense.

And then on the cash flow side, the new ERP system we brought in will help us get to lower DSOs. In our business, we’re asset light. DSOs really drive our working capital. We saw them climb in the first half of this year as we implemented SAP. And we had all the issues that everybody knowingly goes into when you implement SAP with invoicing, cash application, etcetera, and have a clear view on the back half of this year.

Then as we get into ’twenty six, continued decline in DSOs, which will help on the working capital side.

Joe Vafi, Equity Research Analyst, Canaccord: Great. And I think for everyone’s benefit, I mean, when you took over at Advantage, previously, it was a PE backed consolidation platform. So you inherited a lot of systems, right? We did. From a lot of acquisitions.

Dave Peacock, CEO, Advantage Solutions: Three times the average

Joe Vafi, Equity Research Analyst, Canaccord: company, right. It doesn’t feel like there was a ton of integration going on

Dave Peacock, CEO, Advantage Solutions: Yeah. Previously. Right? And I think part of that too is there was a lot of that. I came in in 2023 and a lot had gone on during COVID where it just was really challenging to do.

So part of that was just timing. But we’ve got a great technology team led by Francesco Tinto, who’s our CIO and he’s got, was you know, very experienced. You know, he he was CIO for for craft. Right. He was CIO at Walgreens, and he’s he’s brought great capabilities into our company that’s really helping us transform how we do what we do.

Joe Vafi, Equity Research Analyst, Canaccord: Nice. Nice. And then better cash flows coming. And, you know, I think one of one of the the main catalysts for ADV stock is a d you know, delevering. Correct.

Right? Because you did inherit some leverage when you came in. Right? So maybe kinda tell people where you are, where you are on you know, now and what that journey looks like over time and, how you’re prioritizing cash flow in debt repayment versus maybe in M and A a little bit and then maybe other shareholder value creation efforts.

Dave Peacock, CEO, Advantage Solutions: Right. So debt repayment is the priority use of cash right now. We’re at half the net debt level that we were in 2019. And we’ve seen $400,000,000 reduction in debt since Chris and I and some others came into the business. Some through divestitures, some just through operating cash flow.

We mentioned the first half of this year very knowingly kind of what was going to happen with our cash flow as we’re implementing an ERP, but we also confidence on the second half. And as we look at the second half, if we normalize for the timing of payroll because we do have some shift in payroll timing, we should be about 30% net free cash flow yield in the second half of this year and then 25 or more as you get into ’26 and beyond. So we feel good about the ability to generate cash, especially with a more optimized and tech enabled business.

Joe Vafi, Equity Research Analyst, Canaccord: Right. And I I think you’re at how many turns of net debt are you now? And is there a goal that you think is a better steady state goal over time?

Dave Peacock, CEO, Advantage Solutions: Yeah. We’re at about four and a half, call it, right now. And we wanna be and have said publicly that we’d like to be under three and a half times. And we knew because we were down closer to closer to four as you finish 2024. We knew that was gonna climb up a bit with the implementation of the ERP and fully anticipate that coming back.

And with the cash generation of the business, being able to see that come down fairly rapidly.

Joe Vafi, Equity Research Analyst, Canaccord: I mean, and then if you got to three and a half, would you keep going from there, do you think? Would Yeah.

Dave Peacock, CEO, Advantage Solutions: I mean, think if you get below 3.5, then you have to kind of assess. Do you continue? You reevaluate your use of capital a little bit or you do start looking at other options like share repurchase dividend, M and A as you mentioned. I think a lot more things come to mind that you could consider, but you wanna still manage your your overall leverage as well.

Joe Vafi, Equity Research Analyst, Canaccord: Right. We’re gonna run out of time here soon. I’ve got a couple more. Any questions from the audience or the group? Yeah.

Dave Peacock, CEO, Advantage Solutions: Yeah. I I don’t know that SaaS tech is, you know, our objective. I’m not saying it couldn’t occur as we develop capabilities to manage our core business that could be transferable to other businesses. It’s not the priority, but I could certainly see it as a potential outcome. You mentioned Atlas.

Was a situation where we divested to a party who’s now a partner with us and more skilled in the business and and part of, again, the dataset that we ingest and then actually take and utilize when we combine multiple datasets to just improve the fidelity of the work we do.

Joe Vafi, Equity Research Analyst, Canaccord: Good. We’re kind of about out of time, but any other closing thoughts? No.

Dave Peacock, CEO, Advantage Solutions: I think, look, we we feel optimistic about meeting our guidance as we stated in our quarterly call. And our pipeline is really improved. I mean, Q1 to Q2 and we feel very strong about the pipeline we have. We know recognize the uncertainty of the consumer market, but we believe that we’ll be generating cash in the second half and be able to fulfill on our objectives.

Joe Vafi, Equity Research Analyst, Canaccord: Great. Advantage Solutions, market leader in some very resilient and defensive industries with some company specific catalysts on the way. So, Dave, thanks for being with us.

Dave Peacock, CEO, Advantage Solutions: Alright. Thank you. Appreciate your help.

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