Advantage Solutions Inc. (NASDAQ:ADV) Q2 2023 Earnings Call Transcript

Jason English: Okay. So on the marketing and the sampling side, are you back to Brighton? Should we take the run rate you have here and say this is a reasonable run rate going forward, you’re back to the level of sampling that the markets come to with you’re able to supply the sampling there’s no real further ramp on that one?

Dave Peacock: No. We think there’s still a gap to close. And part — it’s a combination of factors. Some of it is supply-based as far as the supply chains and product availability especially when you’re dealing with new or innovative items. Some of it is personnel. And so we continue especially in regional pockets if you will. Southeast is a little tighter as it relates to labor than a lot of other parts of the country as an example. And then some obviously is just some of our customers getting those programs back even still post-COVID and going within their stores as they assess their strategy going forward. So there’s a number of factors, but we do see continued growth and gap closing as it relates to event count.

Chris Growe: Jason just to add to that we’re a little less than 80% of where we were in 2019. And I think we’re going to continue to see each quarter just a sequential improvement sort of a few percentage points and just keep plotting our way back to that 2019 level and evidence so far this year would indicate that each month we’re seeing that sequentially improve. So I think that should continue.

Jason English: Thank you. I appreciate the numbers there Chris. I know they’re always helpful. Two more questions for me. You — it’s great to see you stabilize your margins. I know your aspirations are not to stabilize, but to restore margins, which would appear to be requisite on further pricing actions to not only kind of cover the ongoing labor inflation but catch up with the stuff that you fell behind on. In light of the inflationary environment more holistically and the fact that retailers are becoming much less accommodative for price increases because they see the cost pressures not as widespread and manufacturers, I suspect aren’t going to be as disciplined as they always are in terms of trying to fight that how is that impacting your ability to price whether we’re talking about this year or next year like the forward? How does that evolving environment influence your pricing power?

Dave Peacock: Yeah. As I mentioned before, a little under a-third of our organic growth year-to-date has come from price. And where we need to have those conversations and everybody is obviously aware of labor inflation, I think those conversations have gone well. We look at our retailer and CPG customers really as partners. And we talk a lot about that and that’s how they refer to us. And so in that spirit of partnership, we have to share the fact that we are dealing with cost escalation. At the same time, it’s incumbent upon us to realize the value proposition for the need relative to what we’re doing. And I mentioned for example with demonstration what you see with a lot of the innovation and private-label growth, private-label obviously is a business that we’re steeped in from the legacy Daymon side, and we’re seeing opportunity with that business as well.

And even the merchandising, we’re doing for retailers things like resets are a bit in higher demand because you’re seeing a little more higher — a little higher interest in cutting in between reset windows. You’re seeing with the innovation growth a lot of need to reset. So the demand for the business is there. And whenever you have demand and then you’ve got real cost pressures usually you can have a rational conversation relative to price.