ST. LOUIS and LOS ANGELES – Advantage Solutions Inc. (NASDAQ: ADV), a prominent provider of business solutions to consumer goods companies, and L.A. Libations, a noted beverage industry innovator, announced today their intent to establish a joint venture named Relentless Advantage.
This collaboration aims to leverage Advantage's comprehensive service suite and national reach with L.A. Libations' entrepreneurial network and retail connections to support emerging consumer packaged goods (CPG) and beverage brands.
The joint venture will merge L.A. Libations' subsidiary, Relentless Trade Solutions, with Advantage's extensive retail operations, thereby expanding the service offerings for rising brands throughout the United States.
Advantage, which collaborates with over 3,500 CPG companies at 250,000 North American retail outlets, will provide L.A. Libations-affiliated brands with the opportunity to scale nationwide and secure shelf space in major retailers beyond Relentless' current footprint.
L.A. Libations will contribute to the partnership by offering Advantage a stream of innovative, growth-stage brands. The combined venture is set to support brands such as Poppi, PLEZi Nutrition by Michelle Obama, Nixie Sparkling Water, and Abbot's plant-based protein products.
Dave Peacock, CEO of Advantage Solutions, expressed that the union of both companies' strengths would help brands more effectively penetrate retail markets around the country, ensuring a smoother path to consumer baskets. Danny Stepper, co-founder and CEO of L.A. Libations, added that the partnership addresses a critical challenge for emerging brands: transitioning products from a retailer's backroom to the shelf.
For Advantage, this venture is expected to strengthen its relationships with key retailers and enhance the availability of innovative products on shelves. L.A. Libations, in turn, will gain a more reliable nationwide market entry and access to Advantage's full suite of services, including supply chain management and sales capabilities.
The companies are progressing towards finalizing the agreement in the upcoming months. This announcement is based on a press release statement and contains forward-looking statements subject to risks and uncertainties that could affect the actual outcomes.
In other recent news, Advantage Solutions reported steady growth in its first quarter of 2024, posting revenues of $771 million and an adjusted EBITDA of $79 million. The company unveiled new reporting segments: Branded Services, Experiential Services, and Retailer Services, with the latter two performing well despite the Branded Services segment seeing a decline due to lower client orders and increased costs. Advantage Solutions also managed to pay down $51 million in debt and repurchase shares, demonstrating its commitment to optimizing its capital structure.
Despite challenges including client exits and wage inflation, Advantage Solutions remains on track to meet its full-year guidance for 2024. The company is making strategic investments in technology and talent, focusing on commercial capabilities, and expressing optimism for the year despite not providing specific growth guidance for the Experiential Services segment.
These recent developments highlight Advantage Solutions' strategic shifts and commitment to maintaining its growth trajectory. The sale of Adlucent and a focus on debt reduction were announced to further streamline its business operations. The company's ongoing efforts to simplify operations and enhance its service offerings suggest a positive outlook for the remainder of the year.
InvestingPro Insights
As Advantage Solutions Inc. (NASDAQ: ADV) embarks on its new joint venture with L.A. Libations to create Relentless Advantage, investors and industry observers are closely monitoring the company's financial health and market performance. According to real-time data from InvestingPro, Advantage Solutions boasts a market capitalization of $963.32 million. Despite the challenges faced by many consumer goods companies, Advantage Solutions is expected to see net income growth this year, a positive indicator for potential investors. This aligns with the company's strategic move to expand its service offerings and market reach through the joint venture.
However, the company's stock price has experienced significant volatility, as evidenced by a 14.81% drop over the past month and a 23.53% fall over the last three months. This level of volatility may be a consideration for investors with a lower risk tolerance. Additionally, the P/E ratio stands at -45.77, reflecting market skepticism about future earnings, but an adjusted P/E ratio for the last twelve months as of Q1 2024 suggests a more favorable outlook at 4.69.
InvestingPro Tips highlight that while analysts have revised their earnings downwards for the upcoming period, they predict the company will turn profitable this year. Furthermore, with gross profit margins considered weak at 13.51%, the joint venture's success in scaling up emerging brands may be crucial for enhancing profitability. With 2 additional tips available on InvestingPro, savvy investors can gain deeper insights into Advantage Solutions' prospects by visiting InvestingPro. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
For those interested in the long-term potential of their investments, it's worth noting that Advantage's liquid assets exceed its short-term obligations, providing a cushion that may support the company's operational needs and strategic initiatives, such as the Relentless Advantage joint venture.
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