Advantage Solutions Inc. (ADVWW) on Q2 2024 Results - Earnings Call Transcript
Operator: Greetings, and welcome to the Advantage Solutions Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ruben Mella, Vice President of Investor Relations. Thank you. Ruben, you may begin.
Ruben Mella: Thank you, operator, and thank you for joining us on Advantage Solutions' second quarter earnings conference call. Dave Peacock, Chief Executive Officer; Chris Growe, Chief Financial Officer; and Sean Choksi, Senior Vice President of Strategy and M&A, are on the call today. Dave and Chris will provide their prepared remarks, after which we will open the call for a question-and-answer session. During this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and involve assumptions, risks and uncertainties that are difficult to predict. It is important to note that actual outcomes and results could differ materially due to several factors, including those described more fully in the company's Annual Report on Form 10-K filed with the SEC. All forward-looking statements are expressly qualified in their entirety by such factors. The company does not undertake any duty to update or revise any forward-looking statements, except as required by law. We want to draw your attention to the fact that our remarks today will focus on certain non-GAAP financial measures. Our earnings release issued earlier today provides a reconciliation of these non-GAAP financial measures to the most comparable GAAP measure. This call is being webcast, and a recording will also be available on the company's Investor Relations website. We will also refer to our presentation during the prepared remarks, which can be found in the Events and Presentations section of the IR website. We filed an 8-K this morning with a recast of revenues and adjusted EBITDA over the last 10 quarters for the new segments. This includes revenues, net of pass-through costs and adjusted EBITDA on a continuing operations and discontinued operations basis. Finally, unless otherwise stated, the financial results discussed today will be from continuing operations. And now I'd like to turn the call over to Advantage's CEO, Dave Peacock.
Dave Peacock: Thanks, Ruben, and thank you all for joining us this morning. I first want to acknowledge our teammates for their hard work during the second quarter in a dynamic environment across CPG companies and retailers. Revenues on an organic basis, excluding pass-through costs, increased approximately 1% to $750 million and adjusted EBITDA was $90 million with margins of 12%. At the same time, we continue to advance the strategic initiatives that are driving our transformation to reset the bar as the premier conduit for consumer brands and retailers that keep commerce and life moving. These initiatives already yield benefits and will continue to do so through our phases of execution over the next 2 years. Over the last 18 months, we have refined Advantage's portfolio to sharpen our focus on the areas where we have a right to win and centralize our corporate functions to drive consistency and efficiency across the enterprise. We are happy to report that we have largely completed the simplification portion of our transformation. This culminated with the recent sale of the Jun Group at the end of July, marking more than 10 largely noncore business divestitures. Most of the proceeds will be used to pay down debt as we target a net leverage ratio of 3.5x or less over the long term. We are midway through our corporate transformation, moving from a fragmented set of businesses focused on their unique service offerings to an integrated enterprise under one umbrella with interconnected service offerings and solutions. During the second quarter, we advanced several initiatives, including upgrading our technology data platforms and recently launching our own AI core competency center to better serve clients in areas such as contract management and routing merchandisers as well as those that serve internal needs like HR workflow and certain analysis of large data sets. Our simplification and enhancements will give teammates the tools to work smarter, faster and achieve more. Advantage's culture is centered on putting people first, which is why we have enduring relationships that result in approximately 95% retention over time among our top 100 clients and inspire the performance that has made us one of Time Magazine's best midsized companies. Last quarter, we announced Advantage's new reporting segments: branded, retailer and experiential services, which are linked more to the customer than service activity across a network of over 4,000 clients in nearly all of the top retailers. We believe this structure provides a clear picture of our business and the drivers of financial performance. I want to share how we see those segments evolving because of the transformation. Let's start with branded services, where we serve as an extension of consumer-packaged goods company, sales and marketing teams. Our primary areas of support to CPGs include selling to retailers not directly serviced by a CPG, including joint business planning, price promotion planning and category reviews. Retail merchandising for CPG clients to ensure on-shelf availability, the right displays and accurate pricing. In omnichannel services where we can manage fully integrated market programs, including retail media campaigns to connect consumers with brands. Within this segment, our business intelligence capabilities are the foundation of our brand and retail execution. With the investments we are making, our intel will become a more meaningful differentiator driving all the activities across our business, including where we send our teams and how we sell to retailers. Our real-time insights take our client service to the next level informing everything from shelf resets to how and where we sample. Our investments in technology are already bringing more speed and precision to the solutions we offer CPG clients through the mountain of proprietary insights we gather. For example, we're collaborating with a retail technology company specializing in image recognition and AI to provide high-speed analytics on inventory tracking. In seconds, we can turn real-time insights into actions to improve brand and retail execution, where a similar process would take days with other providers. The insights and execution we offer allow us to help clients with their existing products, line extensions and innovations. We announced the collaboration with L.A. Libations, a company with emerging and insurgent brands hungry for our expertise. Our collaboration will help get those growth brands onto more shelves and into more retailers nationwide, allowing them to scale faster than ever before. Moving on to our Experiential Services segment, which directly connects shoppers with brands through in-store and online sampling experiences, live events and digital engagement. Our scale and global leadership position gives us a clear competitive advantage. We are expanding this advantage into new and emerging channels and beyond brick-and-mortar. Whether it's grocery, mass or wholesale, our studies show that approximately 85% of shoppers indicate sampling impacts their purchase decision with approximately 65% making a purchase the same day or later. Shoppers who engage in sampling can increase buy rates in units and dollars while spending up to 3x more after sampling events. Our digital sampling capabilities are another way we help clients generate consumer demand. Clients are looking for omnichannel marketing solutions as part of their overall strategy. We are proud to have recently received Amazon's inaugural Gold Tier award for excellence in omnichannel performance. Not only are we growing our business directly with Amazon, we also collaborate extensively with the online retailer, serving brands through branded services to help deliver shopper-centric solutions that enabled all of our CPG clients to realize double-digit growth in the last year. As part of our interconnected offerings, omnichannel services are also vital to each of our business segments. Lastly, retailer services provide end-to-end offerings from private brand strategy to optimizing aisle and shelf spaces to providing retail media network support. We have enduring relationships with most of the largest North American retailers serving more than 100,000 stores annually. Our teams address our clients' most important matters such as ensuring products are stocked and positioned on shelves and displays to inspire purchases and enable growth. Our investments in technology will reduce the time needed to diagnose out-of-stock and shelf gaps while freeing up more time to capitalize on new off-shelf opportunities that command shoppers' attention and convert them into buyers. Just last week, we announced a new strategic collaboration with technology company Swiftly. Swiftly works with brands and retailers to connect shoppers with targeted promotions, rebates and ads on their mobile devices. Adding this new capability will allow us to offer our retailers scalable and targeted solutions that put brands in front of new audiences and drive more people to stores. Finally, we are best positioned with retailers today and into the future to drive private brand strategy and development, delivering quality and value to the shoppers. Our differentiation helps us understand the entire category for a retailer and CPG, including both branded and private brand dynamics. By further enhancing our competitive advantages, we will leverage our unique position to shape how consumers shop across the entire path to purchase. We expect our evolution to expand our reach and create a more seamless experience for brands and retailers to utilize our collective service offerings. Now let's turn to our outlook. As we look to the second half of the year, we expect improved performance while acknowledging that the markets remain uncertain across portions of our business. The seasonality favors this time of year, and we are seeing increased activity for our services. In addition, new business wins from earlier in the year will begin to contribute, especially in experiential services. We are at a point in our transformation where we are aligning the unified organization with our business priorities to fuel long-term profitable growth. We expect these efforts to begin delivering financial benefits in the back half of this year and beyond. These actions include rightsizing talent resources across the enterprise, most notably in branded services. Advancing our strategic collaborations such as Genpact and TCS moving from implementation and upfront investment to executing and realizing efficiency improvements, realizing additional opportunities to reduce overhead costs, such as leased office space after completing the business portfolio rationalization. As the industry continues to deal with wage inflation, we secured additional price increases to help offset the expected impact in the year's second half. In conclusion, we are energized by the progress of our strategic initiatives to transform this business. We are doing this by focusing on our core capabilities, operating with excellence, strengthening our balance sheet and investing in leading-edge technologies and talent. This strategic approach will enable us to provide our clients with high touch, high tech and high-value services. The beneficiaries of our transformation will be our clients who will work with an even more responsive insights-driven organization, our teammates, who will be more empowered to represent advantage and build more successful careers with us and our shareholders as we realize our full potential. With that, I will now pass the call over to Chris to review our financial performance.
Chris Growe: Thank you, Dave, and welcome to all of you joining the call today. In the earnings release and presentation, we provided details regarding our financial performance in the second quarter and the first 6 months of the year. We are pleased with our performance in a dynamic market for CPGs and retailers, driven by more cautious consumer spending behavior. I want to highlight 4 factors that drove our performance in the quarter. First, experiential services increased events per day by 11% year-over-year, and the team once again did a terrific job leveraging the existing infrastructure to accommodate the increased activity. The execution rate, defined as the ability to meet event demand exceeded 92% and event counts overall were 87% of pre-pandemic levels. Second, retailer service was impacted by softness in the traditional grocery channel, which mostly offset the revenue benefits of the Easter holiday shift. The favorable adjusted EBITDA performance was due to pricing actions and solid execution to manage talent deployment and overall costs. We expect increased activity in the second half consistent with the business' seasonal cadence. Third, branded services performance trajectory improved in the quarter. Keep in mind that the divestitures, including the deconsolidation of our European joint venture and planned client exits impact this segment. We continue to engage with existing and new clients to help them navigate a more dynamic market. At the same time, we are investing in our capabilities and reshaping the organization to manage cost and maximize efficiency. We realized some of the savings in the quarter and expect that to continue in the second half of the year, with a portion of the savings used to invest in the transformation. Finally, wage inflation, driven in part by tight labor markets and statement on wage laws was a headwind in our results despite price realization across the 3 business segments. We will continue to find ways to cover labor costs through additional price realization and effective execution. Moving to our balance sheet. During the quarter, we voluntarily repurchased approximately $27 million in secured notes at an attractive discount. As of June 30, our total funded debt outstanding was approximately $1.8 billion, with nearly 90% of our debt hedged or at fixed interest rates. We recently rolled our debt colors to extend interest rate hedges into 2027 and 2028. Our net leverage ratio was approximately 4.1x, inclusive of discontinued operations and adjusted EBITDA. We expect improved performance in the second half and the paydown of debt at attractive returns to lower our net leverage ratio by the end of the year compared to 2023. With the debt paydown to date and the reduction in the term loan pricing, we now expect net interest expense to be $155 million to $165 million compared to the prior guidance of $170 million to $180 million. We were active in the quarter, spending about $9 million to repurchase shares. This year, through the end of July, we repurchased approximately 8 million shares to take advantage of what we believe is an undervalued stock price and to offset employee incentive-related dilution. CapEx is approximately $15 million in the quarter to support our three-year IT transformation projects and maintenance capital requirements. Our transformation teams routinely assess resource allocation, capital requirements and project time lines. We've also been able to appropriately review and adjust cash outlays due to completed divestitures and new partnerships, helping us to optimize our spending. As a result, we are reducing the total three-year IT transformation CapEx funding range by $20 million to $140 million to $150 million. For 2024, we expect CapEx to be $65 million to $80 million versus the original estimate of $90 million to $110 million. We still plan for the spending to taper in 2025 and return to maintenance spending levels in 2026. As we continue to invest in transforming the company, we remain focused on financial discipline. We generated approximately $129 million in adjusted unlevered free cash flow or 132% of adjusted EBITDA, inclusive of discontinued operations. The cash conversion was better than we expected due to continued success with our working capital initiatives and the timing of capital spending. We remain focused on achieving our business objectives for the year, but we still have a lot of work to do; we are pleased with our improved business performance in the second quarter. We have realistic expectations for a stronger second half of the year, which support our expectations for revenues and adjusted EBITDA to grow low single digits on a continuing operations basis now that we've substantially completed the divestitures. The year-over-year increase in SG&A during the first half of the year will narrow in the second half as we lap the heavier investments in people that started in earnest in last year's second half. We remain focused on efficient cash generation even during the year of significant investment and reorganization. The reduced CapEx guidance we expect for the full year should allow us to realize adjusted unlevered free cash flow conversion towards the upper end of the 55% to 65% range, inclusive of discontinued operations. Due to the timing of transformation-related activities and the seasonality of revenue, we expect higher capital spending and increased working capital usage to weigh down cash conversion in the back half of the year. Because of the investments, changes to the organization to transform the business and our cash needs, we expect to generate minimal excess cash in 2024. However, the approximately $280 million in cash proceeds from the divestitures this year provides sufficient liquidity to continue paying down debt. This includes proceeds of approximately $130 million received on July 31 upon the close of the June group sale. Thank you for your time. I will now turn it back over to Dave.
Dave Peacock: We are focused on the opportunities ahead of us. With the investments underway and the interconnected service offerings we are creating, we intend to raise the bar we set for service excellence and create a more unified insight-driven company. There is much more to do, and the leadership team appreciates the hard work of our teammates in accomplishing our strategic and business objectives this year. We will now take your questions. Operator?
Operator: Thank you. [Operator Instructions] And our first question comes from Greg Parrish with Morgan Stanley.
Greg Parrish: Hi. Great. Thanks and good morning. I guess to start with all the economic headlines this past week, give us an update on consumer shopping activity, what you're seeing sort of real time here?
Dave Peacock: Yes. Greg. Yes, that's a good question, and I'm glad you asked because I think there's a lot of reaction to what's going on in the news, if you will, over the last couple of weeks. None of this should be surprising, frankly, because we're still living through the economic ripples from COVID. And if you imagine, as you know, and all of us know, there was a big drop in demand during COVID. And this reopening came on employment recovery plus some fragile supply chains led to broad-based inflation and then while the corrective actions were taken in the market with interest rate increases, inflation persisted, the spending remains strong and employment continued to grow over time. Now what you're seeing with most of that savings being exhausted, is demand slowing down, especially for the lower end of the socioeconomic spectrum. We've seen this probably earlier on the lowest end of the socioeconomic spectrum, but it's starting to creep up even into the lower middle class, if you will. So, what this has led to more broadly, is units being down, a channel shift to some of the more value channels, Max club, dollar stores. You're seeing impact on pack size, you're seeing growth of smaller packs being almost double that of standard and you're seeing a little bit more bought on promo versus recent trends, but more in line with pre-COVID. So not a dramatic change, but more in line with pre-COVID. So, I know there's a lot in headlines around the challenged consumer, and there is certainly a large set of consumers who are challenged economically right now and you're seeing unemployment even tick up a bit. At the end of the day, we remain focused on transforming our business to meet what we envision as a long-term, what I'll call more normal cycle within the CPG and retail space. When we get through this period of ripple impact from COVID, which I think we're still living through as we go through this year, I think we're well positioned to address that long-term trend, but also things short term. So, you've got need for sampling as people are trying to stimulate demand for units. You've got assortment changes based on some of the pack size dynamics I talked about and some of the price promotion. You've got a shift to private label which we are well positioned given the fact that we've got a private label business. And then you've got a need for better retail planning as it relates to price promotion so that retailers can capture that more economically challenged consumer.
Greg Parrish: Great. Thanks for the color. So next question, I'm going to have step up here from first quarter to second quarter in EBITDA. I think 20 million up sequentially. A lot of moving parts, a lot going on. You've talked about some of it. Chris, maybe if you can kind of help us unpack that step up sequentially here and what the big drivers were?
Chris Growe: Yes. I think what you'll see is we have a little bit of a timing differential in our retailer business. We talked about that last quarter, and we got some of that back this quarter just due to the timing of holidays and that kind of thing. At the same time, there has been a real focus within retailer to focus on our costs. And you'll see, therefore, more modest revenue growth, but a pretty strong profit performance. Experiential doing what it does, it's been still, as you know, recovering and, frankly, being really well managed around pricing mix. And certainly, underneath that, that great volume growth that we're seeing there still. I also want to note for you there, Greg, that we have really good execution. We talked about this last year and even probably earlier in the year, but that execution, when you're doing more demonstrations, and we've got plenty of demand and more than we can even fulfill right now, that's really aiding our margin profile in that business, and that's a great benefit to us. And then while branded was still down this quarter, you saw a sequential improvement. It's an area we're really focused on right now and some of the things Dave outlined just now about where we are in the economic environment and the business environment, I think it's putting us in a good place to really address our cost structure there and move that business to continue to show sequential improvement in that business through the second half of the year.
Greg Parrish: And then maybe just follow that up with the back half of the year. So, your target is low single digits, still implies a step up just based on the first half results. So, unpack a little bit on the second half, some of it is probably related to what you're just saying. And then, how much of that is within your control? Is it branded? You talked about increase in client activity. I think you're just talking about seasonality. Maybe just confirm that. And then, I mean, is the guide of low single digits, does that mean is that beholding in any way to kind of an improvement in the market? Or is it all kind of just within your control?
Dave Peacock: Yes. I think, well, first, there is seasonality that's natural in our business. And then Chris mentioned in his prepared remarks that we're lapping investments. So, as you go sequentially by quarter, the second half of this year, kind of the increase in investment that we saw to support some of the transformation and in our services area is, the increment is much less in the second half. We talked about also rightsizing the organization to align with where we see the business, what I'll call over the near term, but even some in the long term and technology is helping with that as well as we're doing some things to get kind of real-time analysis into the hands of our frontline sales folks through tools like Power BI that helps us to get a lot more efficient as it relates to delivering data and analysis in a customer call. And then we do have some new business that's coming on. So we talked about client exits, which we're obviously continuing to kind of lap year-over-year. But we've got new business now being layered on. It was secured in the first half, but actually showing up in the numbers second half, and we do have some pricing rolling through in the second half as well.
Greg Parrish: Okay, great. I'll pass it off. Thanks.
Operator: Thank you. Our next question is from Joseph Vafi with Canaccord. Please proceed with your question.
Joseph Vafi: Hi, guys. Good morning and nice to see all the progress on the repositioning. Just maybe on the cost side a little bit, I know you're continuing efforts on employee utilization and the like. Just be interesting to get an update on that large input of cost of kind of where you are in your journey, you think, in fully optimizing employee utilization?
Dave Peacock: So yes, we are tracking productivity, if you will, in the marketplace across our different business lines, and we are seeing increased productivity. And I think Chris mentioned that on the experiential side, as we're starting to see event count growth, that obviously has a fixed cost coverage aspect to it within our business because there's a regional management infrastructure. And then we track closely the hours in all our businesses and we are seeing lower hours across our business, meaning we're able to meet demand, and we talked about the 1% organic revenue growth with less outers, which is obviously the result of productivity initiatives and technology investments are part of that. Then we're doing a lot in the area of how we leverage our labor across different tasks within maybe the same store, if you will, or even in the same geography. So, a lot of work going on, but we're bullish about being on the front edge of that. So, there's only more opportunity that comes as it relates to optimizing our utilization of labor.
Joseph Vafi: Then just kind of circling back to your comments on the L.A. Libations JV, clearly, with your footprint in the marketplace and the broad service offerings you have, I mean, you could theoretically do this with other emerging brands, it feels like -- is that part of the growth strategy here over time of these other brands in JV structure?
Dave Peacock: Yes, we already have had, you can see it by virtue of the fact that we signed 4,000 clients. A lot of those are emerging or early-stage brands. We're trying to be really smart and actually been working in some cases with investment firms that focus in that area to make sure we're refining those businesses that are going to have consistent backing and the ability to invest in growth to keep up with any demand we may help generate. But the partnership with L.A. Libations is a great opportunity to get in. It's not just beverage, it's a lot of beverage, some, a little bit of snacking, but primarily beverage business where we were frankly underexposed and underrepresented. So, it fills that gap for us. So, as we have always been ahead of business that has supported emerging brands, we now kind of can expand and do it in a bigger way with L.A. Libations in the emerging beverage space.
Joseph Vafi: Great, thanks a lot guys.
Operator: Thank you. And our next question comes from Faiza Alwy with Deutsche Bank.
Faiza Alwy: Yes, hi, good morning. So, I wanted to ask about inflation and pricing. I think you said that the wage inflation is still a headwind as price realization is not covering those pressures. And I think you referenced additional pricing in the back half of the year. So just curious if we're going to see this price cost gap shrink later this year? And at what point do you think we're going to be aligned in terms of pricing and inflation?
Chris Growe: So, you're right in the second quarter and the first half, our pricing was a little short of our inflation. Just to be clear, we do have pricing coming through. We noted that. But at the same time, we have seen, obviously, more aggressive labor-based inflation early in the year. Some of that is just statutory. It's minimum wage laws that's driven inflation overall for our workforce. I think we're being as aggressive as we can and appropriately so with our pricing. At the same time, as I've mentioned before, I think to you and others, that there's other ways that we can address that inflation, be it our cost structure, our business mix, our product mix and I think we're using like that whole suite of levers there to try to control the inflation. You'll see overall from our business this quarter, right, a better profit performance. I think that reflects some other levers we're using. Actually, a good example that's our retailer services segment, where we had relatively flat revenues but a strong profit performance. That's coming from inherently better management of our business, a little mix improvement, that kind of thing. So, I think that's the way I would look at it. And yes, we're going to continue to push pricing. And we have more inflation that we're going to have to address. We're doing that in a number of different ways.
Faiza Alwy: Great, thank you. And then just on the transformation maybe time line, it sounds like you've taken another look at the technology, which resulted in lower CapEx, outlays. I'm curious if -- what's the difference, just share some, I know you touched on this, but share some of the learnings so far. And I just want to clarify, like is the CapEx reduction simply due to divestitures? Or are you looking at some of the spending and rethinking how you should go about it? And also curious if maybe the -- how you were thinking about sort of operating expenses around that transformation are also a bit lower?
Dave Peacock: On the IT side, the CapEx reduction has a little timing aspect to it, but I'll say that it's also a byproduct of the great work our IT team is doing and finding ways to accomplish the same objectives for less. As I always say, when you're building a house, you can have a whole range of expense relative to how you build that house. And I give our IT team a lot of credit for finding efficient ways to build the house we need for our business and do so that we're not giving up on capabilities. And so, I think that's part of it. And then as I mentioned, there is a little bit of phasing to it. But we do see CapEx as we look forward, getting to more normal levels in the 2026 time frame. Then on the OpEx side, as we mentioned, the investments we made in the second half of last year to position ourselves to manage through the transformation, we are starting to lap. And so, they were more of an increment to our OpEx in the first half of 2024 than they will be in the second half. And we're very focused now on looking at our organization and kind of assessing spans and layers and making sure that we have the right structure and recognizing that we've got technology systems and some very strong analytic tools coming to bear and letting that help us determine how we should be structuring and how that might impact our OpEx into the future.
Faiza Alwy: And then just one question around IT and the things that you're investing in. What are you seeing from competitors because there is M&A within the space, curious how you would rate yourself, what you're hearing from your customers in terms of where this would position you competitively other specific areas where maybe you were behind and you're catching up? I know you mentioned some AI investments, things like that. Where do you think you'll end up from a competitive perspective? What are you seeing in the marketplace?
Dave Peacock: Yes. I mean, obviously, number 2 and number 3 competitors have come together, won't speculate on what their plans are as far as the integration and how that goes. I will say that historically and even obviously today, we've had very strong technology, especially in our retail merchandising space as it relates to deploying labor in a very precise way that can demonstrate meaningful demand generation in the market, and we're building on that. And so I'd say a lot of our investment has been, and we're open about it in the first half as it relates to ERP and foundational systems that we needed to just modernize and doing the similar in the HR space, given the vast number of people we're dealing with and the advancements that have occurred within HR operating systems just overall as an industry, allows us to capitalize on that to better manage and more efficiently manage our large labor pool. And then, yes, AI is very exciting. We're working with a number of partners. We've developed our own AI competency center. We've used AI in the past. We're going to be using it in things like contract management, which will help us both query contracts, when necessary, but also be a little more consistent in how we contract and more efficient in the process of contracting. You can imagine we have thousands per year that we're generating. We're using an HR-workflows internally. And we've been using it in the routing of labor and they're doing so, I'd say, at a more advanced level as we look forward. So those are just a few examples. And then my vision, our vision is to expand on that dramatically. I think AI can be a real differentiator for businesses like ours when you're dealing with significant number of hours, tens of millions of labor hours and large data sets and helping drive efficiency within the business.
Faiza Alwy: Great. Thank you so much.
Operator: Thank you. Our next question is from Tyler Pierce with BNP Paribas.
Tyler Pierce: Hi. Good morning, Dave and Chris. Just a quick one for me. Looking through your slide deck here, there's mention of share repurchases. I think this is the first time that I'm seeing this being mentioned in recent history. Obviously, the focus has been on deleveraging, but I just want to understand if any priorities have changed just given where your stock is trading?
Chris Growe: We have been repurchasing shares since the latter part of last year. And the intent, and we'll continue with that, is really around the dilution related to incentive awards that we give to our employees. So therefore -- and look, we've got an overarching view on our stock price and our valuation, which has given us the confidence to continue to buy shares here, but the intent is to try to just limit dilution from incentive awards to our employees. So, you saw some share repurchase that occurred even into July. And I think beyond that, we'll be continuing to just to monitor the market and expectations. I just also want to reiterate, though, that we've got a lot of cash coming in the door related to divestitures that we'll be using mostly for debt reduction. So I think that's the intent to be a little bit more focused on that and continue to balance that against investments we make in the business, a little share repurchase and then continue to reduce our debt with that 3.5x leverage still in our sites here.
Tyler Pierce: There's a little change in the language within your release. I believe before you said majority of cash from the divestiture would be used for debt pay down. And I think you might have said most in today's release. So just wanted to see if there is any intent with the change of language and if that could have implied more cash being used for share purchases, but I think that answers it.
Chris Growe: Yes. I think it'd be other way around, if you see most there and not only that, there's really no intent to change there. We're focused on debt reduction largely.
Tyler Pierce: Great. Thank you, guys. Thank you.
Operator: Thank you. There are no further questions at this time. I want to turn the floor back over to Dave Peacock for closing comments.
Dave Peacock: We appreciate your time this morning and your interest in Advantage Solutions. We look forward to updating you on our progress in the coming months. We will attend the Canaccord Growth Conference next week, August 13 in Boston. We look forward to connecting with you there. Again, thanks for your time today.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
