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What changed in Advantage Solutions Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Advantage Solutions Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+442 added−419 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-01)

Top changes in Advantage Solutions Inc.'s 2024 10-K

442 paragraphs added · 419 removed · 318 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBy leveraging our analytical capabilities and expertise, we develop strategies and provide insights that help retailers establish and grow productive and profitable private label programs across new and existing product categories. This process often begins with a thorough analysis of the marketplace to develop a private label portfolio strategy that aligns with a client’s priorities.
Biggest changeWe help maximize the market potential of private brand portfolios by providing comprehensive strategy, development and management services to retailers and private brand manufacturers. 4 By leveraging our analytical capabilities and expertise, we develop strategies and provide insights that help retailers establish and grow productive and profitable private brand programs across new and existing product categories.
Trade names that are important in identifying and distinguishing our business include, but are not limited to, Advantage Solutions, Advantage Sales, Daymon, SAS and, Club Demonstration Services. Our rights to some of these trade names and trademarks may be limited to select markets. We also own domain names, including advantagesolutions.net.
Trade names that are important in identifying and distinguishing our business include, but are not limited to, Advantage Solutions, Advantage Sales, Daymon, SAS and, Club Demonstration Services. Our rights to some of these trade names and trademarks may be limited to select markets. We also own domain names, including advantagesolutions.net and youradv.com.
In our dedicated coverage model, our associates perform services exclusively for a particular client and have intimate knowledge of its categories and products. Our syndicated coverage model utilizes shared teams in particular channels to perform services for multiple clients while in a store.
In our dedicated coverage model, our teammates perform services exclusively for a particular client and have intimate knowledge of its categories and products. Our syndicated coverage model utilizes shared teams in particular channels to perform services for multiple clients while in a store.
Equal Employment Opportunity Commission and the equivalent state agencies and other similar laws; • food safety matters ( e.g. , federal, state and local certification and training and inspection and enforcement of standards for our associates, facilities, equipment and the products we promote), alcohol beverage marketing regulations, food and permitting matters ( e.g. , licensing under the Perishable Agricultural Commodities Act and regulations from the U.S.
Equal Employment Opportunity Commission and the equivalent state agencies and other similar laws; • food safety matters ( e.g. , federal, state and local certification and training and inspection and enforcement of standards for our teammates, facilities, equipment and the products we promote), alcohol beverage regulations, food and permitting matters ( e.g. , licensing under the Perishable Agricultural Commodities Act and regulations from the U.S.
Finally, we offer hybrid coverage models whereby clients can choose to have dedicated teams covering designated channels or retailers and syndicated coverage for other channels.
We also offer hybrid coverage models whereby clients can choose to have dedicated teams covering designated channels or retailers and syndicated coverage for other channels.
We try to protect trade secrets and know-how by taking reasonable steps to keep them confidential, including entering into nondisclosure and confidentiality agreements with our employees, contractors and associates that contain 6 confidentiality obligations and entering into invention assignment commitments that obligate employees, contractors and associates to assign to us any inventions developed in the course of their work for us.
We try to protect trade secrets and know-how by taking reasonable steps to keep them confidential, including entering into nondisclosure and confidentiality agreements with our teammates and contractors that contain confidentiality obligations and entering into invention assignment commitments that obligate teammates and contractors to assign to us any inventions developed in the course of their work for us.
Foreign Corrupt Practices Act, the UK Bribery Act and other similar anti-bribery and antikickback laws and regulations that generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business; and • federal, state and foreign anticorruption, data protection, privacy, consumer protection, content regulation and other laws and regulations, including without limitation, GDPR and the CCPA.
Foreign Corrupt Practices Act, the UK Bribery Act and other similar anti-bribery and anti-kickback laws and regulations that generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business; and • federal, state and foreign anti-corruption, data protection, privacy, consumer protection, content regulation and other laws and regulations, including without limitation, GDPR and the CCPA.
No matter their career goals, we are committed to developing, rewarding and retaining high-quality associates as we transform our business in response to the ever-changing needs of our clients and industry. We strive to cultivate respect, trust and transparency, and we embrace a diversity of thought and of people.
No matter their career goals, we are committed to developing, rewarding and retaining high-performing teammates as we transform our business in response to the ever-changing needs of our clients and industry. We strive to cultivate respect, trust and transparency, and we embrace a diversity of thought and of people.
Available Information We maintain a link to investor relations information on our website, www.advantagesolutions.ne t , where we make available, free of charge, SEC filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Available Information We maintain a link to investor relations information on our website, https://youradv.com , where we make available, free of charge, SEC filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
These regulatory requirements include, without limitation: • federal, state, local and foreign laws and regulations involving minimum wage, health care, overtime, sick leave, lunch and rest breaks and other similar wage, benefits and hour requirements and other similar laws; 5 • Title VII of the Civil Rights Act and the Americans with Disabilities Act and regulations of the U.S.
These regulatory requirements include, without limitation: • federal, state, local and foreign laws and regulations involving minimum wage, overtime, exempt or non-exempt status, health care, sick leave, lunch and rest breaks and other similar wage, benefits and hour requirements and other similar laws; • Title VII of the Civil Rights Act and the Americans with Disabilities Act and regulations of the U.S.
Given the nature of these needs, our recruiting and retention practices are important to meeting the needs and expectations of our clients and customers. As such, we set clear objectives with our associates, analyze performance and reward and recognize associates who outperform.
Given the nature of our services, our recruiting and retention practices are important to meeting the needs and expectations of our clients and customers. As such, we set clear objectives with our teammates, analyze performance and reward and recognize teammates who outperform.
For some of our retailer clients, we perform other in-store services, such as compliance audits, data collection and in-store product assembly, and certain advisory services, such as analytics and planogram services intended to increase sales and optimize inventory and space management, so that the retailer’s personnel can focus on interacting with and servicing its shoppers.
For some of our retailer clients, we perform other in-store services, such as compliance audits, data collection, in-store product assembly and certain advisory services, such as analytics and planogram services to increase sales and optimize inventory and space management. These services allow the retailer’s personnel to focus on interacting with and servicing its shoppers.
At the same time, we remain committed to providing opportunities for our associates to grow and develop their careers with us and encourage internal promotions to leadership roles within our business units for high-performing or motivated associates.
At the same time, we remain committed to providing 5 opportunities for our teammates to grow and develop their careers with us and encourage internal movement including promotions to leadership roles within our business units for high-performing or motivated teammates.
Digital Media and Advertising We offer targeted media and advertising solutions powered by our proprietary data that deliver to curated, custom audiences from first and third-party data sources. Our cross-screen advertising capabilities enable advertisers to target and engage with custom audience segments across devices via rich media, display, email and value exchange ads.
We offer targeted media and advertising solutions powered by our proprietary data or through third-party partnerships that deliver to curated, custom audiences. Our cross-screen advertising capabilities enable advertisers to target and engage with custom audience segments across devices via rich media, display, email and value exchange ads.
Diverse perspectives amongst our team allows them to evaluate issues through different experiences and perspectives and help guide us in a thoughtful way. Our diversity, equity and inclusion efforts include enterprise-wide training, a DE&I board, and eight distinct employee resource groups, and we encourage a culture of inclusivity.
Diverse perspectives amongst our teammates allow them to evaluate issues through different experiences and perspectives and help guide us in a thoughtful way. Our diversity, equity and inclusion efforts include enterprise-wide training, a diversity equity and inclusion board, and eight distinct resource groups, and we encourage a culture of inclusivity.
Our talent and leadership development programs are intended to foster our associates’ ambitions, help develop their careers and support their changing needs and the needs of the business. We believe that our associates’ contributions and active engagement with their fellow associates are important to our operational performance.
Our talent and leadership development programs are intended to foster our teammates’’ ambitions, help develop their careers and support their changing needs and the needs of the business. We believe that our teammates’ contributions and active engagement with their fellow teammates are important to the strength of our operational and financial performance.
Our retailer-centric services include: Retailer-Centric Merchandising We serve select retailers as their exclusive provider, and other retailers as an authorized provider, of in-store merchandising or reset services.
Our primary retailer services include: Retailer Merchandising We serve select retailers as their exclusive providers and other retailers as authorized providers of in-store merchandising or reset services.
We leverage software for daily point-of-sale store data, supply chain data and advanced algorithms to target and correct potential store-level merchandising issues in real time, such as stock keeping units that are void, out of stock or past expiration.
Our branded merchandising services leverage internally sourced or third-party technologies for daily point-of-sale store data, supply chain data and advanced algorithms to target and correct potential store-level merchandising issues in real-time, such as stock-keeping units that are void, out of stock or past expiration.
We prepare customized, data-driven business plans on behalf of our manufacturer clients and present a business case to increase distribution of their products, and optimize the shelf placement, pricing and promotion of their products, to our extensive network of industry contacts spanning retailer buying organizations and senior executive ranks.
We create customized, data-driven business plans for clients and present business cases that aim to increase product distribution and optimize shelf placement, pricing and promotion of their products within our extensive network of industry contacts spanning retailer buying organizations and senior executive ranks.
Human Capital Management Our people represent one of the most important assets to our business. As of December 31, 2023, we employed approximately 70,000 associates. Approximately 20,000 are full-time and approximately 50,000 are part-time. Approximately 59,000 of our associates are in the United States.
Human Capital Management Our people, who we refer to as our teammates, represent one of the most important assets to our business. As of December 31, 2024, we employed approximately 69,000 teammates. Approximately 17,000 are full-time and approximately 52,000 are part-time. Approximately 52,000 of our teammates are in the United States.
For brands and retailers of all sizes, we help get the right products on the shelf (whether physical or digital) and into the hands of consumers (however 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 assist brands and retailers of all sizes in getting the right products on the shelf - both physical or digital - and into the hands of consumers however they choose to shop. We innovate as a trusted partner with our clients, solving problems to increase efficiency, effectiveness and sales across various channels.
As of December 31, 2023, none of our associates in the United States were represented by a trade union or were the subject of a collective bargaining agreement. We are committed to creating a performance culture with a high degree of associate engagement.
As of December 31, 2024, none of our teammates in the United States were represented by a trade union or were the subject of a collective bargaining agreement. We are committed to promoting a performance culture with a high degree of teammate engagement and an environment where everyone feels welcomed and included.
Furthermore, as our company, industry and clients evolve, we are focused at all levels on improving turnover, retention, development, and the overall associate experience. We experience meaningful turnover among our entry-level associates each year, and the turnover is most significant among those who work part-time. We experience less turnover among our mid-level and senior-level associates.
Furthermore, as our company transforms within an evolving industry, we are focused at all levels on improving turnover, retention, development, and the overall teammate experience. We historically experience meaningful turnover among our entry-level part-time teammates each year We experience less turnover among our mid-level and senior-level teammates.
Department of Agriculture), custom and import matters with respect to products imported to and exported across international borders; • the U.S.
Department of Agriculture), custom and import matters with respect to products imported to and exported across international borders; • federal and foreign laws and regulations regarding tariffs, taxes, embargoes, retaliations and other governmental responses; • the U.S.
We are committed to creating a workplace where everyone is respected, valued, feels a sense of belonging and has an equitable opportunity to succeed. We believe diversity, equity and inclusion are important components of our commitment to put people first and our long-term success as an enterprise.
We are committed to creating a workplace where our teammates are seen, heard, respected, protected, valued, feel a sense of belonging and have an opportunity to pursue their career goals and dreams. We believe diversity, equity and inclusion are important components of our commitment to putting people first and our long-term operational and financial success.
We also conduct advanced analytical services for clients such as retailer point-of-sale and shopper card analytics and primary market and shopper research. Brand-Centric Merchandising We deploy teams in retail locations to support manufacturers’ in-store sales strategies.
Furthermore, we offer advanced analytical services for clients, including retailer point-of-sale and primary market and shopper research. Branded Merchandising We deploy teams in retail locations that draw on our comprehensive insights to support consumer packaged goods companies' in-store sales strategies.
Item 1. Business Our Company We are a leading business solutions provider to consumer goods manufacturers and retailers. We have a strong platform of competitively advantaged sales and marketing services built over multiple decades – essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce and shopper marketing.
Item 1. Business Our Company As a leading business solutions provider to consumer-packaged goods companies and retailers, we offer a platform of high-quality, interconnected, essential, business-critical omni-channel services such as brokerage (headquarter sales), retail merchandising, in-store sampling and private brand development.
Our associates conduct both cyclical and ad hoc store visits to manage product availability and positioning, implement promotions, install point-of-purchase displays and perform other value-added merchandising services. Tablet technology and software are used extensively in the workflow.
Our teammates conduct regular and ad hoc store visits to manage product availability and positioning, implement promotions, install point-of-purchase displays, and perform other value-added merchandising services down to the aisle, shelf, and SKU. We offer our clients a wide array of flexible service models for our retail services coverage.
We help identify the most compelling product categories to target and specific products to develop. We also provide packaging and design services to bring our clients’ brands to life through strong brand identities. Our retailer clients are supported by analytical teams and associates who execute strategies through assortment planning, product sourcing and marketing and ongoing program management.
This process often begins with a thorough marketplace analysis to develop a private brand portfolio strategy that aligns with a client’s priorities. We help identify the most compelling product categories to target and specific products to develop. We also provide packaging and design services to bring our retailer clients’ brands to life through strong brand identities.
In store, our associates use our merchandising application and scanners to efficiently and effectively execute a range of activities such as distribution tasks, validating promotional compliance or answering survey questions.
For example, we recently implemented routing software that can efficiently and effectively guide our teammates from location to location, considering store volume, sales velocity, location and in-store conditions. Additionally, our teammates utilize merchandising applications and scanners in-store to efficiently and effectively execute various activities such as distribution tasks, validating promotional compliance or answering survey questions.
Our services are enhanced by our in-depth understanding of both the manufacturers’ and retailers’ strategic priorities, which is supported by our close physical proximity to our clients’ offices, as well as our proactive approach in identifying business-building opportunities.
Our services are enhanced by our comprehensive understanding of both the manufacturers’ and retailers’ strategic priorities and proactive approach to identifying business-building opportunities. Our scale allows us to offer these services locally, regionally or nationally for a client’s designated product, brand, or entire portfolio.
We listen, learn and invest in capabilities that allow us to meet the evolving needs of brands and retailers – solving existing problems better and new problems quickly, to navigate change in an increasingly omni-channel world. This, in turn, helps us compound our relationships with clients.
We listen, learn and invest in capabilities that help us meet the evolving needs of brands and retailers. This approach enables us to address existing challenges more effectively and tackle new issues promptly while navigating an increasingly omni-channel world. Our experience and the transformation underway are designed to improve our core capabilities through technology and strategic partnerships over time.
These brand-centric services include: Headquarter Relationship Management We act as a representative of our consumer goods manufacturer clients and facilitate relationships with retailers across a range of matters, including business development and sales planning efforts.
We represent our clients and facilitate relationships with retailers across a range of matters, including business development and sales planning that drives awareness and gets brands onto physical and digital shelves for consumers.
We use this information to improve the routing of our retail teams to stores where issues exist, or may soon exist, as well as prioritize our associates’ work to address the highest-value opportunities while conducting a store visit. We offer our clients a full spectrum of flexible service models for our retail services coverage.
We use this information to improve the routing of our retail teams to address client’s needs and mitigate risk. We also prioritize our teammates’ work to address the highest-value opportunities while conducting a store visit. We also offer supply chain and logistics services that deliver a more efficient and seamless flow of products from the warehouse to the consumer.
Manufacturers also hire us for national consumer promotions, which are designed to stimulate demand for, and awareness of, their products more broadly.
Consumer packaged goods companies also hire us for national consumer promotions designed to broadly stimulate demand and awareness of their products. Experiential Services We help brands break through, build loyalty, and drive sales with omni-channel sampling experiences in-store and online.
These professionals analyze consumer purchase and retailer data to identify opportunities to increase the sales of our clients’ products and categories. We use analytical tools, which aggregate data to guide sales strategies to expand product distribution and optimize other factors such as assortment, planograms, pricing and trade promotions.
We utilize analytical tools that aggregate data to inform sales strategies to expand product distribution and optimize other factors such as assortment, planograms, pricing and trade promotions. Additionally, we employ post-promotion analytical tools, working closely with clients and retailers to make the necessary adjustments that align with sales and profit objectives at the product and category level.
In-Store Media We manage a wide variety of media, merchandising and display platforms for retailers, including multi-manufacturer circular programs. In addition to our brand-centric and retailer-centric sales services, we have a portfolio of other broadly applicable offerings that are designed to grow sales and reduce costs for clients.
Our retailer clients are supported by analytical teams and teammates who execute strategies through assortment planning, product sourcing and marketing and ongoing program management. Agency Services We manage a wide variety of media, merchandising and display platforms for retailers, including multi-manufacturer print and digital circular programs.
Our scale allows us to offer these services on a local, regional or national level, as well as for a client’s designated product, brand or entire portfolio. Analytics, Insights and Intelligence To support our sales efforts, we field a team of analytics professionals who provide category and space management services.
To support our sales efforts, we have a dedicated team of analytics professionals who provide category and space management services. These experts analyze consumer purchase and retailer data to identify retail opportunities that increase sales of our client's products and categories.
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At the most fundamental level: • We sit at the nexus of consumer goods companies and retailers and serve as a trusted partner to both. • We help our clients sell more while spending less.
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We are proud to serve more than 4,000 clients across diverse categories, such as grocery, mass merchandisers, club, drug and convenience retailers, maintaining trusted relationships and reach spanning more than 100,000 coast-to-coast locations. Our services reflect our differentiated business systems, talent, relationships, scale and expertise.
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We make them more effective and more efficient. • We win by providing best-in-class service every day and innovating on a nimble operating platform. • We drive productivity to provide fuel for reinvestment and growth. • Simply put, we are built to do it better, cheaper and faster.
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We are committed to staying at the forefront of industry trends to harness data and analytic solutions that support our teammates in creating, executing, and measuring insight-based plans to foster our clients’ business growth.
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We offer headquarter sales representation services to consumer goods manufacturers, for whom we prepare and present to retailers a business case to increase distribution of manufacturers’ products and optimize how they are displayed, priced and promoted. We also make in-store merchandising visits for both manufacturer and retailer clients to ensure the products we represent are adequately stocked and properly displayed.
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At the most fundamental level: • We operate at the nexus of consumer-packaged goods companies and retailers and are trusted partners for both. • We help our clients sell more while spending less, making their operations more effective and efficient. • We succeed by delivering market-leading services daily and offering innovative client solutions through a nimble operating platform. • We drive our productivity to fuel reinvestment and growth in Advantage Solutions. • Simply put, we seek to operate better, cost-effectively, and faster, keeping commerce and life moving for clients and consumers. 2 Our Solutions Our interconnected solutions for consumer-packaged goods brands and retailers are provided across three segments — Branded Services, Experiential Services and Retailer Services.
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Within our marketing services, our largest service offering is retail experiential, also known as in-store sampling or demonstrations, through which we create and manage highly customized large-scale sampling programs (both in-store and on-line) for leading retailers.
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Branded Services We serve as the strategic extension of consumer-packaged goods brands by offering services that include selling to retailers, retail merchandising and omni-channel marketing. We typically generate revenues on a commission, fee-for-service or cost-plus basis. Our primary branded services include: Brokerage Services (Headquarter Sales) Our brokerage service offerings focus on providing solutions for branded consumer goods manufacturers and retailers.
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We also have a collection of specialized agency businesses, where we provide private label services to retailers and develop granular marketing programs for brands and retailers through our shopper, consumer and digital marketing agencies. Our expertise and scale have compounded over decades, built on differentiated business systems, talent, relationships, and technology.
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We navigate retail distribution complexities and enhance consumer experiences with timely delivery and customer satisfaction. We help clients reach their target audiences by leveraging technology to optimize logistics, procurement and supply chain management. 3 We regularly seek opportunities to enhance our suite of technologies through internal development and strategic partnerships.
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These relationships are enhanced by a suite of technology offerings which leverage data and analytics solutions to support our associates in creating, executing and measuring insight-based plans to grow our clients’ businesses. 2 Our Solutions Our services are provided across two segments — sales and marketing.
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Omni-commerce Marketing Services We create distinct, shopper-centric brand experiences that seek to stand out physically and digitally across multiple consumer touchpoints, including digital shelf, Amazon, in-store, promotions, social/influencer, media, custom content and beyond. We immerse ourselves in each brand, leveraging consumer insights and retail intelligence to craft memorable campaigns that help brands break through and grow.
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Sales Segment Through our sales segment, we provide our clients with a full suite of outsourced solutions to enhance sales in the traditional retail, foodservice and e-commerce channels. Within our sales segment, we typically generate revenues on a commission, fee-for-service or cost-plus basis.
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We are a global leader in sampling and demonstration services, which we believe enhance the shopper experience and accelerate buy rates across channels and touchpoints, driving trial, sales lift, and brand loyalty. We manage highly customized, large-scale sampling programs for leading brands and retailers. Revenues are primarily recognized as fee-for-service and cost-plus fees for providing in-store, digital sampling, and demonstrations.
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Our primary sales services include: Brand-Centric Services Our service offerings have been predominately centered around providing solutions to branded consumer goods manufacturers ( i.e ., non-private label manufacturers).
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We cultivate community, loyalty, and results-driven relationships through world-class brand events. We design, orchestrate, and execute brand and premium events connecting consumers with brands, retailers, and products, leveraging our expertise in consumer insights and experiential marketing. Retailer Services We provide retailers end-to-end solutions, including private brand strategy, merchandising, retail media and aisle/shelf optimization.
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We also use post-promotion analytical tools to evaluate promotion effectiveness and work with clients and retailers to make the adjustments necessary to meet sales and profit objectives at the product and category level. Our teams of category managers are available in every market, including some who sit onsite with retailers and assist in developing analysis to support recommendations.
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Retailer Services segment revenues are primarily recognized in 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.
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For example, routing software helps guide our associates from location to location in the most efficient and effective way based on factors such as store volume, sales velocity, store location and in-store conditions.
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We equip retailers with experienced trade professionals, movers and lifters to build out and bring the physical shopping experience to life. Advisory Services We expand our clients’ businesses globally with our leading private brand agency, Daymon. We have the expertise to drive loyalty, differentiation, and sales by combining strong relationships through decades of partnerships with manufacturers and retailers.
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Our retail services teams focus either on manufacturers or particular retail channels, such as grocery, drug, mass, convenience, club and natural/specialty, which allows them to develop expertise in either manufacturer products or a particular class of trade. 3 Retailer-Centric Services We leverage our strategic position with retailers to develop solutions that address their needs.
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These services include: Marketing Segment We believe that our marketing segment is differentiated from our competition by our people, retail connectivity, entrepreneurial marketing mindset and scale.
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We launched our marketing business in 2000 in response to our observation of the challenges that our clients were experiencing by working with traditional marketing agencies that were not effectively connecting brand marketing strategies, sales planning efforts and retailer strategies to offer cohesive brand marketing.
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Our position as an intermediary in the market gives us deep insight and understanding into manufacturers’ needs from a sales perspective, their marketing and promotion strategies, as well as retailer strategies. We believe this position enables us to create more effective, shopper- focused marketing promotions by connecting client sales and marketing strategies with those of retailers.
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We believe that our marketing business is differentiated from traditional marketing agencies in that it is built upon our insights and understanding of manufacturer and retailer strategies, leverages our ability to design and execute coordinated, large-scale marketing platforms in retail and combines capabilities from across the various disciplines in our portfolio to influence consumers at critical points along the purchase journey through execution platforms that reach audiences in-store and out of store to deliver superior client results.
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Since founding our marketing business, we have grown to become a national agency collective and are the agency of record for many of the most recognized brands across the retail, packaged goods, technology, apparel, automotive, travel, entertainment, education and healthcare industries.
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We were ranked by Ad Age as the largest U.S. promotions agency and the largest U.S. experiential and event marketing agency from 2014 to 2023 based on prior year revenues. Within our marketing segment, we typically generate revenues on a fee-for-service, cost-plus or commission basis.
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Brand-Centric Services Shopper and Consumer Marketing For manufacturer clients, we analyze shopper behavior and apply our deep retailer knowledge and expertise to offer planning, execution and measurement of insight-based, retailer-specific promotions that target a retailer’s specific shopper base to drive product sales.
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We combine an understanding of how a brand’s consumers behave as shoppers in different channels, formats and retailers (mined from data resources) with an understanding of retailer objectives, strategies and preferred programming tactics (informed by our connectivity and resources in the field) to develop programs that successfully promote the sales of clients’ products at retail.
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Brand Experiential We design and execute brand experiences in retail and non-retail settings in order to help brands engage, educate, acquire and retain consumers and impact purchase behavior. 4 Our brand experiential solutions include large-scale festivals and mobile tours, as well as assisted sales programs whereby our associates act as extensions of client sales teams, educating consumers as well as store employees.
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Retailer-Centric Services Retail Experiential We design and execute one-to-one engagement strategies in order to drive product trial and sales and help retailers differentiate their in-store experience and generate more loyalty from shoppers. This includes in-store sampling and demo programs with fully-scaled operations including staffing, training, field management, assembly, fulfillment, technology and reporting.
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We deploy teams at certain retailers that develop event concepts in conjunction with marketing, merchandising and store operations and then secure supplier support and funding for the programs.
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Our other retail experiential solutions include premium advisors who provide assistance in complex categories (such as beauty and adult beverages), virtual advisors who provide assistance via text messaging or web and curated sampling boxes for online grocery pick-up and delivery orders.
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Retail experiential constitutes the largest service in the marketing segment, representing more than half of our retailer-centric and marketing revenues. Private Label We help maximize the market potential of private label portfolios by providing comprehensive private label strategy, development and management services to retailers and private label manufacturers.
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In addition to our brand-centric and retailer-centric marketing services, we have a portfolio of other broadly applicable offerings that are designed to engage consumers and enhance marketing efforts for clients.
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These services include: Digital Marketing Using advanced analytics, our digital marketing teams provide a wide range of services to clients, including: interactive design and development across mobile, tablet and desktop platforms; application development; content management solutions; paid media, including search engine marketing, and programmatic and direct media; and social media development and management.
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Organizational Changes During the fourth quarter of 2023, certain organizational changes were announced that will impact our future internal reporting. As a result of these changes, we expect to have three reportable segments. We expect that any operational changes impacting our reportable segments will be effective in the first quarter of 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowance; • tax effects of equity-based compensation; • changes in tax laws, regulations or interpretations thereof; or • future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates. 21 In addition, our effective tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation allowance, deductibility of certain items or changes to existing accounting rules or regulations.
Biggest changeOur future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowance; • tax effects of equity-based compensation; • changes in tax laws, regulations or interpretations thereof; or • future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates.
Allocating goodwill to assets held for sale requires us to make certain assumptions about a business unit, including the financial performance of such business unit against our company as a whole. There are inherent uncertainties related to these estimates and assumptions.
Allocating goodwill to assets held for sale requires us to make certain assumptions about a business, including the financial performance of such business unit against our company as a whole. There are inherent uncertainties related to these estimates and assumptions.
Foreign Corrupt Practices Act and sanctions regimes; • being subject to foreign anti-bribery laws in the jurisdictions in which we operate, such as the UK Bribery Act; • reduced protection for intellectual property rights; • increased financial accounting and reporting complexity; • additional legal compliance requirements, including custom and import requirements with respect to products imported to and exported across international borders; • exposure to foreign currency exchange rate fluctuations; • exposure to local economic conditions; • limitations on the repatriation of funds or profits from foreign operations; • exposure to local political conditions, including adverse tax policies, civil unrest and war; and 12 • the risks of a natural disaster, public health crisis (including the occurrence of a contagious disease or illness, such as the coronavirus), an outbreak of war, the escalation of hostilities and acts of terrorism in the jurisdictions in which we operate.
Foreign Corrupt Practices Act and sanctions regimes; • being subject to foreign anti-bribery laws in the jurisdictions in which we operate, such as the UK Bribery Act; • reduced protection for intellectual property rights; • increased financial accounting and reporting complexity; • additional legal compliance requirements, including custom and import requirements with respect to products imported to and exported across international borders; • exposure to foreign currency exchange rate fluctuations; • exposure to local economic conditions; • limitations on the repatriation of funds or profits from foreign operations; • exposure to local political conditions, including adverse tax policies, civil unrest and war; and • the risks of a natural disaster, public health crisis (including the occurrence of a contagious disease or illness, such as the coronavirus), an outbreak of war, the escalation of hostilities and acts of terrorism in the jurisdictions in which we operate.
These include: • authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • provision for a classified board of directors so that not all members of our board of directors are elected at one time; • not permitting the use of cumulative voting for the election of directors; • permitting the removal of directors only for cause; • limiting the ability of stockholders to call special meetings; • requiring all stockholder actions to be taken at a meeting of our stockholders; • requiring approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend, or repeal the proposed bylaws or repeal the provisions of the third amended and restated certificate of incorporation regarding the election and removal of directors; and 22 • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
These include: • authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; • provision for a classified board of directors so that not all members of our board of directors are elected at one time; • not permitting the use of cumulative voting for the election of directors; • permitting the removal of directors only for cause; • limiting the ability of stockholders to call special meetings; • requiring all stockholder actions to be taken at a meeting of our stockholders; • requiring approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend, or repeal the proposed bylaws or repeal the provisions of the third amended and restated certificate of incorporation regarding the election and removal of directors; and • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.
While we attempt to mitigate the revenue impact of any consolidation by maintaining existing or winning new service arrangements with the combined companies, there can be no assurance as to the degree to which we will be able to do so as consolidation continues in the industries we serve, and our business, financial condition or results of operations may be adversely affected.
While we attempt to mitigate the impact of any consolidation by maintaining existing or winning new service arrangements with the combined companies, there can be no assurance as to the degree to which we will be able to do so as consolidation continues in the industries we serve, and our business, financial condition or results of operations may be adversely affected.
We may find that there is an insufficient number of qualified individuals to fill our associate positions with the qualifications we seek. Competition in these communities for qualified staff could require us to pay higher wages and provide greater benefits, especially if there is significant improvement in regional or national economic conditions.
We may find that there is an insufficient number of qualified individuals to fill our positions with the qualifications we seek. Competition in these communities for qualified staff could require us to pay higher wages and provide greater benefits, especially if there is significant improvement in regional or national economic conditions.
When companies consolidate, the services they previously purchased separately are often purchased by the combined entity, leading to the termination of relationships with certain service providers or demands for reduced fees and commissions. The combined company may also choose to insource certain functions that were historically outsourced, resulting in the termination of existing relationships with third-party service providers.
When companies consolidate, the services they previously 8 purchased separately are often purchased by the combined entity, leading to the termination of relationships with certain service providers or demands for reduced fees and commissions. The combined company may also choose to insource certain functions that were historically outsourced, resulting in the termination of existing relationships with third-party service providers.
Any of the foregoing could harm our commercial success. We are dependent on proprietary technology licensed from others. If we lose our licenses, we may not be able to continue developing our products . We have obtained licenses that give us rights to third party intellectual property that is necessary or useful to our business.
Any of the foregoing could harm our commercial success. We are dependent on technology licensed from others. If we lose our licenses, we may not be able to continue developing our products . We have obtained licenses that give us rights to third party intellectual property that is necessary or useful to our business.
The payment of cash dividends is also restricted under the terms of the agreements governing our debt and our ability to pay dividend may also be restricted by the terms of any future credit agreement or any securities we or our subsidiaries may issue. An active, liquid trading market for our Class A common stock may not be available.
The payment of cash dividends is also restricted under the terms of the agreements governing our debt and our ability to pay dividends may also be restricted by the terms of any future credit agreement or any securities we or our subsidiaries may issue. An active, liquid trading market for our Class A common stock may not be available.
Federal Trade Commission, the U.S. Department of Agriculture and other federal, state, local 20 and international regulatory authorities. For example, certain of our clients market and sell products containing cannabidiol (“CBD”). CBD products are subject to a number of federal, state, local and international laws and regulations restricting their use in certain categories of products and in certain jurisdictions.
Federal Trade Commission, the U.S. Department of Agriculture and other federal, state, local and international regulatory authorities. For example, certain of our clients market and sell products containing cannabidiol (“CBD”). CBD products are subject to a number of federal, state, local and international laws and regulations restricting their use in certain categories of products and in certain jurisdictions.
In August 2022, the California Attorney General announced its first enforcement action under the CCPA against a retailer that to pay penalties and comply with injunctive terms, including overhauling its online disclosures and opt-out rights and providing regular reports to the California Attorney General regarding its data sharing practices.
In August 2022, the California Attorney General announced its first enforcement action under the CCPA against a retailer that to pay penalties and comply with injunctive terms, including overhauling its online disclosures and opt-out rights and providing regular reports to the California Attorney General 15 regarding its data sharing practices.
In the event that such data and services are unavailable for our use or the cost of acquiring such data and services increases, our business could be adversely affected. We may be unable to timely and effectively respond to changes in digital practices and policies, which could adversely affect our business, financial condition or results of operations.
In the event that such data and services are unavailable for our use or the cost of acquiring such data and services increases, our business could be adversely affected. 18 We may be unable to timely and effectively respond to changes in digital practices and policies, which could adversely affect our business, financial condition or results of operations.
If our data and network infrastructure were to fail, 14 or if we were to suffer a data security breach, or an interruption or degradation of services in our data center, third-party cloud, and other infrastructure environments, we could lose important data, which could harm our business and reputation, and cause us to incur significant liabilities.
If our data and network infrastructure were to fail, or if we were to suffer a data security breach, or an interruption or degradation of services in our data center, third-party cloud, and other infrastructure environments, we could lose important data, which could harm our business and reputation, and cause us to incur significant liabilities.
The market prices for our Class A common stock are likely to be volatile and may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • quarterly variations in our operating results compared to market expectations; • changes in preferences of our clients; • announcements of new products or services or significant price reductions; • the size of our public float; • fluctuations in stock market prices and volumes; • defaults on our indebtedness; • changes in senior management or key personnel; • the granting, vesting, or exercise of employee stock options, restricted stock, or other equity rights; • the payment of any dividends thereon in shares of our common stock; • changes in financial estimates or recommendations by securities analysts; • negative earnings or other announcements by us; • downgrades in our credit ratings; • material litigation or governmental investigations; • issuances of capital stock; • global economic, legal, and regulatory factors unrelated to our performance, including the COVID-19 pandemic; or • the realization of any risks described in this Annual Report under “ Risk Factors .” In addition, in the past, stockholders have instituted securities class action litigation against companies following periods of market volatility.
The market prices for our Class A common stock are likely to be volatile and may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • quarterly variations in our operating results compared to market expectations; • changes in preferences of our clients; • announcements of new products or services or significant price reductions; • the size of our public float; • fluctuations in stock market prices and volumes; • defaults on our indebtedness; • changes in senior management or key personnel; • the granting, vesting, or exercise of employee stock options, restricted stock, or other equity rights; • the payment of any dividends thereon in shares of our common stock; • changes in financial estimates or recommendations by securities analysts; • negative earnings or other announcements by us; • downgrades in our credit ratings; • material litigation or governmental investigations; • issuances of capital stock; • global economic, legal, and regulatory factors unrelated to our performance; or • the realization of any risks described in this Annual Report under “ Risk Factors .” In addition, in the past, stockholders have instituted securities class action litigation against companies following periods of market volatility.
While we attempt to mitigate negative 10 implications to client relationships and the revenue impact of any pricing pressure by aligning our revenues opportunity with satisfactory client outcomes, there can be no assurance as to the degree to which we will be able to do so successfully.
While we attempt to mitigate negative implications to client relationships and the revenue impact of any pricing pressure by aligning our revenues opportunity with satisfactory client outcomes, there can be no assurance as to the degree to which we will be able to do so successfully.
However, there can be no assurance that we will find attractive acquisition targets, that we will acquire them at attractive prices, that we will succeed at effectively managing the integration of acquired businesses into our existing operations or that such acquired businesses or technologies will be well received by our clients, potential clients or our investors.
There can be no assurance that we will find attractive acquisition targets, that we will acquire them at attractive prices, that we will succeed at effectively managing the integration of acquired businesses into our existing operations or that such acquired businesses or technologies will be well received by our clients, potential clients or our investors.
Any security breach or incident, including personal data breaches, that we experience could result in unauthorized access to, or misuse, modification, destruction or unauthorized acquisition of, our internal sensitive corporate data, such as personal data, financial data, trade secrets, intellectual property, or other competitively sensitive or confidential data.
Any security breach or incident, including personal data breaches, that we experience could result in unauthorized access to, or misuse, modification, destruction or unauthorized acquisition of, our internal sensitive corporate data, such as personal data, financial data, trade secrets, intellectual 14 property or other competitively sensitive or confidential data.
We may also experience hesitancy, 16 reluctance, or refusal by European or multi-national customers to continue to use some of our services due to the potential risk exposure of personal data transfers and the current data protection obligations imposed on them by certain data protection authorities.
We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to continue to use some of our services due to the potential risk exposure of personal data transfers and the current data protection obligations imposed on them by certain data protection authorities.
If we approve plans to divest or dispose a business unit, accounting rules require us to reclassify assets associated with such business unit, including the value of contracts, client relationships, goodwill, and other intangible assets, as assets held for sale.
If we approve plans to divest or dispose a business, accounting rules may require us to reclassify assets associated with such business unit, including the value of contracts, client relationships, goodwill, and other intangible assets, as assets held for sale.
However, the steps we have taken to protect 19 our intellectual property in the United States and in foreign countries may not be adequate, and third parties may misappropriate, dilute, infringe upon or otherwise harm the value of our intellectual property.
However, the steps we have taken to protect our intellectual property in the United States and in foreign countries may not be adequate, and third parties may misappropriate, dilute, infringe upon or otherwise harm the value of our intellectual property.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. 25 Borrowings under our credit facilities are at variable rates of interest and expose us to interest rate risk.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly. Borrowings under our credit facilities are at variable rates of interest and expose us to interest rate risk.
We must also train and, in some circumstances, certify these associates under our policies and practices and any applicable legal requirements. If we are unable to hire, timely train or retain talented individuals we may face higher turnover and increased labor costs, which could compromise the quality of our service, and could adversely affect our business.
We must also train and, in some circumstances, certify these teammates under our policies and practices and any applicable legal requirements. If we are unable to hire, timely train or retain talented individuals we may face higher turnover and increased labor costs, which could compromise the quality of our service, and could adversely affect our business.
Risks Related to the Company’s Business and Industry Market-driven wage increases and changes to wage or job classification regulations, including minimum wages could adversely affect our business, financial condition or results of operations. Market competition has caused and may continue to cause us to increase the salaries or wages paid to our associates or the benefits packages that they receive.
Risks Related to the Company’s Business and Industry Market-driven wage increases and changes to wage or job classification regulations, including minimum wages could adversely affect our business, financial condition or results of operations. Market competition has caused and may continue to cause us to increase the salaries or wages paid to our teammates or the benefits packages that they receive.
In particular, our marketing segment experienced a significant decline in revenues, primarily due to the temporary suspension or reduction of certain in-store demonstration services and decreased demand in our digital marketing 8 services, both of which we believe were caused by the COVID-19 pandemic and the various governmental and private responses to the pandemic.
In particular, our Experiential Services segment experienced a significant decline in revenues, primarily due to the temporary suspension or reduction of certain in-store demonstration services and decreased demand in our digital marketing services, both of which we believe were caused by the COVID-19 pandemic and the various governmental and private responses to the pandemic.
Replacing such systems is often time-consuming and expensive and can also be intrusive to daily business operations. Further, we may not always be successful in executing these upgrades and improvements, which may result in a failure of our systems. We may experience periodic system interruptions from time to time.
Replacing such software and infrastructure is often time-consuming and expensive and can also be intrusive to daily business operations. Further, we may not always be successful in executing these upgrades and improvements, which may result in a failure of our systems. We may experience periodic system interruptions from time to time.
In addition, new data processes and datasets associated with emerging technologies are coming under increased regulatory scrutiny, such as biometrics and automated decision-making. We cannot yet determine the impact such future laws, regulations and standards may have on our business.
In addition, new data processes and datasets associated with emerging technologies are coming under increased regulatory scrutiny, such as biometrics, artificial intelligence, and automated decision-making. We cannot yet determine the impact such future laws, regulations and standards may have on our business.
Our ability to meet our workforce needs, while controlling associate-related costs, including salaries, wages and benefits, is subject to numerous external factors, including the availability of talented persons in the workforce in the local markets in which we operate, prevailing unemployment rates and competitive wage rates in such markets.
Our ability to meet our workforce needs, while controlling teammate-related costs, including salaries, wages and benefits, is subject to numerous external factors, including the availability of talented persons in the workforce in the local markets in which we operate, prevailing unemployment rates and competitive wage rates in such markets.
Low unemployment rates or lower levels of labor force participation rates may increase the likelihood or impact of such market pressures. Any of these changes affecting wages or benefits for our associates could adversely affect our business, financial condition or results of operations.
Low unemployment rates or lower levels of labor force participation rates may increase the likelihood or impact of such market pressures. Any of these changes affecting wages or benefits for our teammates could adversely affect our business, financial condition or results of operations.
The CCPA also establishes a private right of action if certain personal information of individuals is subject to an unauthorized access and exfiltration, theft, or disclosure as a result of a business’s violation of the duty to implement and maintain reasonable security procedures and practices, which authorizes statutory damages $100 to $750 per person per incident even if there is no actual harm or damage to plaintiffs.
The CCPA also establishes a private right of action if certain personal information of individuals is subject to an unauthorized access and exfiltration, theft, or disclosure as a result of a business’s violation of the duty to implement and maintain reasonable security procedures and practices, which authorizes statutory damages of approximately $100 to $800 per person per incident even if there is no actual harm or damage to plaintiffs.
If all or a significant number of our associates become unionized and the terms of any collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability.
If all or a significant number of our teammates become unionized and the terms of any collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability.
Subject to covenant compliance and certain conditions, as of December 31, 2023, the agreements governing our indebtedness would have permitted us to borrow up to an additional $455.9 million under our revolving credit facility.
Subject to covenant compliance and certain conditions, as of December 31, 2024, the agreements governing our indebtedness would have permitted us to borrow up to an additional $455.9 million under our revolving credit facility.
Although we take reasonable efforts to comply with all applicable laws and regulations and have invested and continue to invest human and technology resources into data privacy compliance efforts, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of an incident or other claim.
Although we make reasonable efforts to comply with all applicable laws and regulations and have invested and continue to invest human and technology resources into data privacy compliance efforts, there can be no assurance that we will not be subject to 16 regulatory action, including fines, in the event of an incident or other claim.
Moreover, if a significant number of our associates participate in labor unions, it could put us at increased risk of labor strikes and disruption of our operations or adversely affect our growth and results of operations.
Moreover, if a significant number of our teammates participate in labor unions, it could put us at increased risk of labor strikes and disruption of our operations or adversely affect our growth and results of operations.
Notwithstanding this successful election, we could face future union organization efforts or elections, which could lead to additional costs, distract management or otherwise harm our business. If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings.
Notwithstanding this successful election, we could 13 face future union organization efforts or elections, which could lead to additional costs, distract management or otherwise harm our business. If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant charges against earnings.
We actively seek to address this focus and comply with the evolving laws and regulations related thereto. However, compliance with such laws and regulations may result in increased operating costs for us.
We actively seek to address this focus and comply with the evolving laws and regulations related thereto. However, compliance with such laws and regulations will result in increased operating costs for us.
Currently, none of our associates in the United States are represented by a union. However, our associates have the right under the National Labor Relations Act to choose union representation.
Currently, none of our teammates in the United States are represented by a union. However, our teammates have the right under the National Labor Relations Act to choose union representation.
In each of November 2020 and March 2021, we filed a registration statement on Form S-1 under which certain of our stockholders may sell, from time to time, 50,000,000 shares and 255,465,000 shares of our Class A common stock, respectively, that, if sold, will be freely tradable without restriction under the Securities Act.
In each of November 2020 and March 2021, we filed a registration statement on Form S-1 under which certain of our stockholders may sell, from time to time, shares of our Class A common stock, respectively, that, if sold, will be freely tradable without restriction under the Securities Act.
For example, as part of our joint venture with, and investments in Smollan, we are restricted under certain circumstances from making direct acquisitions and otherwise expanding many of our service offerings into markets outside of North America.
For example, as part of our joint venture with, and investments in Smollan, we were restricted under 11 certain circumstances from making direct acquisitions and otherwise expanding many of our service offerings into markets outside of North America.
We cannot predict the full extent to which a resurgence of the COVID-19 pandemic, or any future pandemic or health epidemic, may have similar or other adverse effects on our business, financial condition, results of operations and liquidity, and the degree to which it may impact other risk factors described in this Annual Report.
We cannot predict the full extent to which a future pandemic or health epidemic, may have similar or other adverse effects on our business, financial condition, results of operations and liquidity, and the degree to which it may impact other risk factors described in this Annual Report.
In December 2019, a union which commonly represents employees in the supermarket industry filed a petition with the National Labor Relations Board to represent approximately 120 of our associates who work in and around Boston. An election was held, and based on certified results of the election we prevailed in this election.
In December 2019, a union which commonly represents employees in the supermarket industry filed a petition with the National Labor Relations Board to represent approximately 120 of our teammates who worked in and around Boston. An election was held, and based on certified results of the election we prevailed in this election.
Client procurement and fee reduction strategies could put additional operational and financial pressure on our services or negatively impact our relationships, business, financial condition or results of operations. Many of our clients seek opportunities to reduce their costs through procurement strategies that reduce fees paid to third-party service providers.
Client procurement practices could put additional operational and financial pressure on our services or negatively impact our relationships, business, financial condition or results of operations. Many of our clients seek opportunities to reduce their costs through procurement practices that reduce fees paid to third-party service providers.
If we are unable to maintain our corporate culture as we evolve and execute our growth strategies, our business, operating results and financial condition could be harmed. Acquiring new clients and retaining existing clients depends on our ability to avoid or manage business conflicts among competing brands.
If we are unable to promote our corporate culture as we transform and execute our growth strategies, our business, operating results and financial condition could be harmed. Acquiring new clients and retaining existing clients depends on our ability to avoid or manage business conflicts among competing brands.
Additionally, during the year ended December 31, 2022, and in connection with our annual impairment assessment of goodwill and indefinite-lived intangible assets, we recognized non-cash goodwill and non-cash intangible asset impairment charges of $1,367.5 million and $205.0 million, respectively, in our reporting units and indefinite-lived trade names.
During the year ended December 31, 2022, and in connection with our annual impairment assessment of goodwill and indefinite-lived intangible assets, we also recognized goodwill and intangible asset impairment charges of $1,367.5 million and $205.0 million, respectively, in our reporting units and indefinite-lived trade names.
Among other things, in the absence of a liquid public trading market: 23 • you may not be able to liquidate your investment in shares of Class A common stock; • you may not be able to resell your shares of Class A common stock at or above the price attributed to them when we became a publicly traded company; • the market price of shares of Class A common stock may experience significant price volatility; and • there may be less efficiency in carrying out your purchase and sale orders.
Among other things, in the absence of a liquid public trading market: • you may not be able to liquidate your investment in shares of Class A common stock; • you may not be able to resell your shares of Class A common stock at or above the price attributed to them when we became a publicly traded company; • the market price of shares of Class A common stock may experience significant price volatility; and • there may be less efficiency in carrying out your purchase and sale orders. 23 The trading price of our Class A common stock may be volatile or may decline regardless of our operating performance.
On a pro forma basis, assuming no other prepayments of the credit facility and that our revolving credit facility is fully drawn (and to the extent that SOFR, is in excess of the 0.00% and 0.75% floors applicable to our revolving credit facility and our term loan credit facility, respectively), each one-eighth percentage point change in interest rates would result in an approximately $0.9 million change in annual interest expense on the indebtedness under our credit facilities.
On a pro forma basis, assuming no other prepayments of the credit facility and that our revolving credit facility is fully drawn (and to the 25 extent that SOFR, is in excess of the 0.75% floor applicable to our revolving credit facility and our term loan credit facility, respectively), each one-eighth percentage point change in interest rates would result in an approximately $0.8 million change in annual interest expense on the indebtedness under our credit facilities.
For example, the COVID-19 pandemic and measures taken to mitigate the spread of COVID-19, including restrictions on large gatherings, closures of face-to-face events and indoor dining facilities, “shelter in place” health orders and travel restrictions, had far-reaching direct and indirect impacts on many aspects of our operations, including temporary termination of certain in-store demonstration services and other services, as well as on consumer behavior and purchasing patterns.
For example, the COVID-19 pandemic and measures taken to mitigate the spread of COVID-19, including restrictions on large gatherings, “shelter in place” health orders and travel restrictions, had far-reaching direct and indirect impacts on many aspects of our operations, including temporary termination of certain in-store demonstration services and other services, as well as on consumer behavior and purchasing patterns.
In November 2021, our board of directors authorized a share repurchase program, under which we may repurchase up to $100 million of our outstanding Class A common stock (the “2021 Share Repurchase Program”). As of December 31, 2023, the remaining amount available for repurchase pursuant to the 2021 Share Repurchase Program is $81.1 million.
In November 2021, our board of directors authorized a share repurchase program, under which we may repurchase up to $100.0 million of our outstanding Class A common stock (the “2021 Share Repurchase Program”). As of December 31, 2024, the remaining amount available for repurchase pursuant to the 2021 Share Repurchase Program is $47.1 million.
The failure to maintain 11 the key aspects of our culture as our organization evolves could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and compromised the quality of our client service, all of which are important to our success and to the effective execution of our business strategy.
The failure to promote the key aspects of our culture as our organization transforms could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and compromised quality of our client service, all of which are important to our success and to the effective execution of our business strategy.
Our facilities, as well as the facilities of third-parties that provide or maintain, or have access to our data or network infrastructure, are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures and similar events.
Our facilities, as well as the facilities of third-parties that provide services, maintain, or otherwise have access to our data or network infrastructure, are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cybersecurity attacks, terrorist attacks, power losses, telecommunications failures and similar events.
Summary of Principal Risks Associated with Our Business Set forth below is a summary of some of the principal risks we face: • market-driven wage changes or changes to labor laws or wage or job classification regulations, including minimum wage; • our ability to hire, timely train, and retain talented individuals for our workforce, and to maintain our corporate culture as we grow; • the effects of the COVID-19 pandemic or future pandemics and the measures taken to mitigate its spread including its adverse effects on our business, results of operations, financial condition and liquidity; • developments with respect to retailers that are out of our control; • our ability to continue to generate significant operating cash flow; • consolidation within the industry of our clients creating pressure on the nature and pricing of our services; • consumer goods manufacturers and retailers reviewing and changing their sales, retail, marketing, and technology programs and relationships; • our ability to successfully develop and maintain relevant omni-channel services for our clients in an evolving industry and to otherwise adapt to significant technological change; • client procurement strategies putting additional operational and financial pressure on our services; • our ability to avoid or manage business conflicts among competing brands; • limitations, restrictions, and business decisions involving our joint ventures and minority investments; • our ability to identify attractive acquisition targets, acquire them at attractive prices, and successfully integrate the acquired businesses; • difficulties in integrating acquired businesses; • complications with the design or implementation of our new enterprise resource planning system; • changes in applicable laws or regulations; • the possibility that we may be adversely affected by other political, economic, business, and/or competitive factors; 7 • potential and actual harms to our business arising from the matter related to the 2018 acquisition of Take 5 Media Group (the “Take 5 Matter”); • failure to meet environmental, social and governance (“ESG”) expectations or standards could adversely affect our business, results of operations, financial condition, or stock price; • our ability to respond to changes in digital practices and policies; • exposure to foreign currency exchange rate fluctuations and risks related to our international operations; • our substantial indebtedness and our ability to refinance at favorable rates; • our ability to maintain proper and effective internal control over financial reporting in the future; and • the ability to maintain applicable listing standards.
Summary of Principal Risks Associated with Our Business Set forth below is a summary of some of the principal risks we face: • market-driven wage changes or changes to labor laws or wage or job classification regulations, including minimum wage; • our ability to hire, timely train and retain talented individuals for our workforce, and to maintain our corporate culture as we grow; 6 • the effects of future pandemics and the measures taken to mitigate their spread including their adverse effects on our business, results of operations, financial condition and liquidity; • developments with respect to retailers that are out of our control; • our ability to continue to generate significant operating cash flow; • consolidation within the industry of our clients creating pressure on the nature and pricing of our services; • consumer goods manufacturers and retailers reviewing and changing their sales, retail, marketing and technology programs and relationships; • our ability to successfully develop and maintain relevant omni-channel services for our clients in an evolving industry and to otherwise adapt to significant technological change; • interruption of supply chains and tariffs, retaliations or other governmental restrictions; • client procurement strategies putting additional operational and financial pressure on our services; • our ability to avoid or manage business conflicts among competing brands; • limitations, restrictions and business decisions involving our joint ventures and minority investments; • our ability to identify attractive acquisition targets, acquire them at attractive prices and successfully integrate the acquired businesses; • difficulties in integrating acquired businesses; • complications with the implementation of our new enterprise resource planning system; • changes in applicable laws or regulations; • the possibility that we may be adversely affected by other political, economic, business and/or competitive factors; • failure to meet environmental, social and governance expectations or standards could adversely affect our business, results of operations, financial condition or stock price; • our ability to respond to changes in digital practices and policies; • exposure to foreign currency exchange rate fluctuations and risks related to our international operations; • our substantial indebtedness and our ability to refinance at favorable rates; • our ability to maintain proper and effective internal control over financial reporting in the future; and • the ability to maintain applicable listing standards.
As of December 31, 2023, we employed approximately 70,000 associates, many of whom are paid above, but near, applicable minimum wages, and their wages may be affected by changes in minimum wage laws. Additionally, many of our salaried associates are paid at rates that could be impacted by changes to minimum pay levels for exempt roles.
As of December 31, 2024, we employed approximately 69,000 teammates, many of whom are paid above, but near, applicable minimum wages, and their wages may be affected by changes in minimum wage laws. Additionally, many of our salaried teammates are paid at rates that could be impacted by changes to minimum pay levels for exempt roles.
(“Topco”), we have goodwill and intangible assets recorded on our balance sheet of $0.9 billion and $1.6 billion, respectively, as of December 31, 2023, as further described in Note 3, Goodwill and Intangible Assets to our consolidated financial statements for the year ended December 31, 2023.
(“Topco”), we have goodwill and intangible assets recorded on our balance sheet of $0.5 billion and $1.3 billion, respectively, as of December 31, 2024, as further described in Note 3 — Goodwill and Intangible Assets to our consolidated financial statements for the year ended December 31, 2024.
As of December 31, 2023, we had total indebtedness of $1.9 billion, excluding debt issuance costs, with an additional $44.1 million of letters of credit outstanding under our revolving credit facility.
As of December 31, 2024, we had total indebtedness of $1.7 billion, excluding debt issuance costs, with an additional $44.1 million of letters of credit outstanding under our revolving credit facility.
Our systems may not be able to satisfy these changing requirements and manufacturer, retailer and associate expectations, or may require significant additional investments or time in order to do so.
Our systems may not be able to satisfy these changing requirements and manufacturer, retailer, and teammate expectations, or may require significant additional investment or time in order to do so.
We could also encounter higher-than-expected earn-out payments, unforeseen transaction- and integration-related costs or delays or other circumstances such as disputes with or the loss of key or other personnel from acquired businesses, challenges or delays in integrating systems or technology of acquired businesses, a deterioration in our associate and client relationships, harm to our reputation with clients, interruptions in our business activities or unforeseen or higher-than-expected inherited liabilities.
We could also encounter higher-than-expected earnout payments, unforeseen transaction- and integration-related costs or delays or other circumstances such as disputes with or the loss of key or other personnel from acquired businesses, challenges or delays in integrating systems or technology of acquired businesses, a deterioration in our relationship with our teammates and clients, harm to our reputation with clients, interruptions in our business activities or unforeseen or higher-than-expected inherited liabilities.
Our five largest clients generated approximately 18.8% of our revenues, none of which individually generated more than 5%, in the fiscal year ended December 31, 2023. These clients are generally able to reduce or cancel spending on our services on short notice 9 for any reason.
Our five largest clients generated approximately 21.8% of our revenues, none of which individually generated more than 10%, in the fiscal year ended December 31, 2024. These clients are generally able to reduce or cancel spending on our services on short notice for any reason.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Take 5 Matter ” and “ Legal Proceedings .” As a result of these matters, we may be subject to a number of additional harms, risks and uncertainties, including substantial costs for legal fees in connection with or related to the potential lawsuits by clients or other interested parties who claim to have been harmed by the misconduct at Take 5, other costs and fees related to the Take 5 Matter (in excess of the amounts already being offered as refunds), potential governmental investigations arising from the Take 5 Matter.
See “ Legal Proceedings—Proceedings Relating to Take 5 .” As a result of these matters, we may be subject to a number of additional harms, risks and uncertainties, including substantial costs for legal fees in connection with or related to the potential lawsuits by clients or other interested parties who claim to have been harmed by the misconduct at Take 5, other costs and fees related to the Take 5 Matter (in excess of the amounts previously offered as refunds), potential governmental investigations arising from the Take 5 Matter.
The failure to meet the challenges involved in integrating businesses and to realize the anticipated benefits of any acquisition could cause an interruption of, or a loss of momentum in, the activities of our combined business and could adversely affect our results of operations.
The integration of any businesses is a complex, costly and time-consuming process. The failure to meet the challenges involved in integrating businesses and to realize the anticipated benefits of any acquisition could cause an interruption of, or a loss of momentum in, the activities of our combined business and could adversely affect our results of operations.
As further described elsewhere in this Annual Report, we acquired the business of Take 5 Media Group in April 2018, and a result of an investigation into that business, we terminated all operations of the Take 5, including the use of its associated trade names and the offering of its services to its clients and offered refunds to clients of collected revenues attributable to the period after our acquisition.
We acquired the business of Take 5 Media Group (“Take 5”) in April 2018, and a result of an investigation into that business, we terminated all operations of Take 5, including the use of its associated trade names and the offering of its services to its clients and offered refunds to clients of collected revenues attributable to the period after our acquisition.
For example, during the year ended December 31, 2023, we recognized a non-cash intangible asset impairment charge of $43.5 million related to our indefinite-lived sales trade name, in connection with our deconsolidation of the European joint venture and planned disposition of the foodservice businesses.
Moreover, during the year ended December 31, 2023, we recognized an intangible asset impairment charge of $43.5 million related to our indefinite-lived trade name, in connection with our deconsolidation of the European joint venture and planned disposition of the foodservice businesses.
We expect that a significant portion of these clients’ sales will continue to be made through a relatively small number of retailers and that this percentage may increase if the growth of mass retailers and the trend of retailer consolidation continues.
We expect that a significant portion of these clients’ sales will continue to be made through a relatively small number of retailers and that this percentage is anticipated to increase if the growth of these large retailers continues.
If few analysts commence coverage of us, the trading price of our stock could be negatively affected. Even with analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our Class A common stock could decline.
Even with analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our Class A common stock could decline.
Alleged violations of the CCPA may result in substantial civil penalties or statutory damages when applied at scale, up to $2,500 per violation or $7,500 per intentional violation of any CCPA requirement, which may be applied on a per-person or per-record basis.
Alleged violations of the CCPA may result in substantial civil penalties or statutory damages when applied at scale, of approximately $3,000 per violation or approximately $8,000 per intentional violation of any CCPA requirement, which may be applied on a per-person or per-record basis.
Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions, public health crises (including the COVID-19 pandemic) or unanticipated adverse weather, could result in lower-than-planned sales during key revenue-producing seasons.
Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions, public health crises, including, without limitation, pandemic, natural and man-made disasters, or unanticipated adverse weather, could result in lower-than-planned sales during key revenue-producing seasons.
Future pandemics may have an adverse effect on our business, results of operations, financial condition and liquidity. The COVID-19 pandemic, including the measures taken to mitigate its spread, had, and may continue to have, adverse effects on our business and operations.
Future pandemics may have an adverse effect on our business, results of operations, financial condition and liquidity. The COVID-19 pandemic, including the measures taken to mitigate its spread, had adverse effects on our business and operations. A future pandemic or health epidemic, could adversely impact our business and results of operations in a number of ways.
Complications with the design or implementation of our new enterprise resource planning system could adversely impact our business and operations. We rely extensively on information systems and technology to manage our business and summarize operating results.
Complications with the implementation of our new enterprise resource planning system could adversely impact our business and operations. We rely extensively on information systems and technology to manage our business and summarize operating results. We are in the process of implementing a new enterprise resource planning (“ERP”) system to replace our existing operating and financial systems.
Our business is seasonal in nature and quarterly operating results can fluctuate. Our services are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters.
Our services are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters.
If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause our Class A common stock price to decline.
If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our Class A common stock, which in turn could cause our Class A common stock price to decline. 26 Substantial future sales of our Class A common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
The CCPA regulates the collection, use and processing of personal information relating to California residents, and which grants certain 15 privacy rights to California residents, including rights to request access to and to request deletion of personal information relating to such individuals under certain circumstances.
The CCPA regulates the collection, use, and processing of personal information relating to California residents, which includes our teammates. It grants certain privacy rights to California residents, including the right to access, correct, and delete personal information relating to such individuals under certain circumstances.
We may not be able to successfully implement the ERP system without experiencing delays, increased costs and other difficulties. If we are unable to successfully design and implement the new ERP system as planned, our financial positions, results of operations and cash flows could be negatively impacted.
If we are unable to successfully implement the new ERP system as planned, our financial positions, results of operations and cash flows could be negatively impacted.
Risks Related to Indebtedness We need to continue to generate significant operating cash flow in order to fund our internal investments and acquisitions and to service our debt. Our business currently generates operating cash flow, which we use to fund our internal investments and acquisitions to grow our business and to service our substantial indebtedness.
Our business currently generates operating cash flow, which we use to fund our internal investments and acquisitions to grow our business and to service our substantial indebtedness.
Failure to meet environmental, social and governance (“ESG”) expectations or standards could adversely affect our business, results of operations, financial condition, or stock price. 18 In recent years, there has been an increased focus from stakeholders, regulators and the public in general on ESG matters, including greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, diversity, equality and inclusion, responsible sourcing and supply chain, human rights, and social responsibility, including changes in laws and regulations related to compliance and disclosure obligations related thereto.
In recent years, there has been an increased focus from stakeholders, regulators and the public in general on ESG matters, including greenhouse gas emissions and climate-related risks, renewable energy, water stewardship, waste management, diversity, equity and inclusion, responsible sourcing and supply chain, human rights, and social responsibility, including changes in laws and regulations related to compliance and disclosure obligations related thereto.
For example, frequent or unusually heavy snowfall, ice storms, rainstorms, windstorms or other extreme weather conditions over a prolonged period could make it difficult for consumers to travel to retail stores or foodservice locations. Such events could lead to lower revenues, negatively impacting our financial condition and results of operations.
For example, frequent or unusually heavy snowfall, ice storms, rainstorms, windstorms or other extreme weather conditions over a prolonged period could make it difficult for consumers to travel to retail stores or foodservice locations.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our common stock, the price of our Class A common stock could decline. 26 The trading market for our Class A common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business.
The trading market for our Class A common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. If few analysts commence coverage of us, the trading price of our stock could be negatively affected.
If we are unable to provide, improve or develop innovative digital services and solutions in a timely manner or at all, our business, financial condition or results of operations could be adversely impacted. We may be unable to adapt to significant technological change, which could adversely affect our business, financial condition or results of operations.
If we are unable to provide, improve or develop innovative digital services and solutions in a timely manner or at all, our business, financial condition or results of operations could be adversely impacted. Interruption of supply chains and tariffs, retaliations or other governmental restrictions could adversely affect our business and our profitability.
Remaining competitive in this industry requires that we closely monitor and respond to trends in all industry sectors. We cannot assure you that we will be able to anticipate and respond successfully to such trends in a timely manner.
We face competition from a few other large, national or super-regional agencies as well as many niche and regional agencies. Remaining competitive in this industry requires that we closely monitor and respond to trends in all industry sectors. We cannot assure you that we will be able to anticipate and respond successfully to such trends in a timely manner.
See “ Legal Proceedings .” We are subject to many federal, state, local and international laws with which compliance is both costly and complex. Our business is subject to various, and sometimes complex, laws and regulations, including those that have been or may be implemented in response to the COVID-19 pandemic.
See “ Legal Proceedings .” We are subject to many federal, state, local and international laws with which compliance is both costly and complex. Our business is subject to various, and sometimes complex, laws and regulations.
We may choose to pay cash, incur debt or issue equity securities to pay for any such acquisition. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. The sale of equity to finance any such acquisition could result in dilution to our stockholders. We may encounter significant difficulties integrating acquired businesses.
We are subject to the California Consumer Protection Act of 2018, which became effective in 2020, as well as its amendment, the California Privacy Rights Act of 2020 (“CPRA,” and together, the “CCPA”), which went into effect on January 1, 2023.
We are subject to the California Consumer Protection Act of 2018, which became effective in 2020, as well as its amendment, the California Privacy Rights Act of 2020 (the “CPRA”) and accompanying regulations, the California Consumer Privacy Act Regulations (collectively, the “CCPA”).
Many of these factors are outside of our control, and any one of them could result in increased costs, decreased expected revenues and diversion of management time and energy, all of which could adversely impact our business and results of operations. 13 If we are not able to successfully integrate an acquisition, if we incur significantly greater costs to achieve the expected synergies than we anticipate or if activities related to the expected synergies have unintended consequences, our business, financial condition or results of operations could be adversely affected.
If we are not able to successfully integrate an acquisition, if we incur significantly greater costs to achieve the expected synergies than we anticipate or if activities related to the expected synergies have unintended consequences, our business, financial condition or results of operations could be adversely affected.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; and • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. 27 We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; • a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; and • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents.
See “Risk Factors – Failures in, data breaches of, or incidents involving, our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk management oversight function and has delegated risk management to the Audit Committee of the Board of Directors.
See “ Risk Factors — Failures in, data breaches of, or incidents involving, our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations. ” 27 Cybersecurity Governance Our board of directors considers cybersecurity risk as part of its risk management oversight function and has delegated risk management to the audit committee of the board of directors.
In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Committee reports to the full Board regarding its activities, including those related to risk management and cybersecurity.
In addition, management updates the audit committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The audit committee reports to the full board of directors regarding its activities, including those related to risk management and cybersecurity .
The Company’s cybersecurity program is primarily managed by a dedicated cybersecurity function reporting to our CISO who reports to our CDO. Our CISO has over 20 years of executive experience in IT security, and previously served as the CISO of Blue Shield of California and Kellogg Company.
The Company’s cybersecurity program is primarily managed by a dedicated cybersecurity function reporting to our CISO who reports to our CDO. Our CISO has over 20 years of experience leading cybersecurity teams and managing technology risks across multiple industries, including healthcare, sales and marketing.
Added
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters are located in Irvine, California, where we rent approximately 22,000 square feet pursuant to a lease agreement that is scheduled to expire in May 2026. We anticipate that we will complete the relocation of our corporate headquarters to Clayton, Missouri, in the St. Louis-metropolitan area in 2024.
Biggest changeItem 2. Properties Our corporate headquarters are located in Clayton, Missouri, in the St. Louis-metropolitan area, where we rent approximately 6,000 square feet pursuant to a lease agreement that is scheduled to expire in August 2034. As of December 31, 2024, we operated more than 70 offices, including in the United States and internationally. We lease all of our properties.
We typically seek office space in proximity to retailers’ headquarters or buying offices, to aid our associates in acting as sales representatives for our manufacturer clients.
Leases on these offices expire at various dates from 2025 to 2034, excluding any options for renewal. We typically seek office space in proximity to retailers’ headquarters or buying offices, to aid our teammates in acting as sales representatives for our manufacturer clients.
Removed
As of December 31, 2023, we operated more than 70 offices, including in the United States and internationally. We lease all of our properties, except for a property in Connecticut that we own. Leases on these offices expire at various dates from 2024 to 2034, excluding any options for renewal.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThere can be no assurance, however, that the above matters and other legal matters will not result in us having to make payments in excess of such accruals or that the above matters or other legal matters will not materially or adversely affect our business, financial position, results of operations, or cash flows. 28 Commercial Matters We have been involved in various litigation matters and arbitrations with respect to commercial matters arising with clients, vendors and third-party sellers of businesses.
Biggest changeThere 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.
Although we have insurance covering certain liabilities, we cannot assure that the insurance will be sufficient to cover any potential liability or expenses associated with the Take 5 Matter. Item 4. Mine Safety Disclosures. Not applicable. Part II
Although we have insurance covering certain liabilities, we cannot be certain that the insurance will be sufficient to cover any potential liability or expenses associated with the Take 5 Matter. Item 4. Mine Safety Disclosures. Not applicable. Part II
The Take 5 Matter may result in additional litigation against us, including lawsuits from clients, or governmental investigations, which may expose us to potential liability in excess of the amounts being offered by us as refunds to Take 5 clients.
The Take 5 Matter may result in additional litigation against us, including lawsuits from clients, or governmental investigations, which may expose us to potential liability in excess of the amounts we previously offered as refunds to Take 5 clients.
We are currently unable to determine the amount of any potential liability, costs or expenses (above the amounts already being offered as refunds) that may result from any lawsuits or investigations associated with the Take 5 Matter or determine whether any such issues will have any future material adverse effect on our financial position, liquidity or results of operations.
We are currently unable to determine the amount of any potential liability, costs or expenses that may result from any lawsuits or investigations associated with the Take 5 Matter or determine whether any such issues will have any future material adverse effect on our financial position, liquidity, or results of operations.
In connection with the Take 5 Matter, we voluntarily disclosed to the United States Attorney’s Office and the Federal Bureau of Investigation certain misconduct occurring at Take 5. We intend to cooperate in this and any other governmental investigation that may arise in connection with the Take 5 Matter.
We refer to the foregoing as the “Take 5 Matter.” We voluntarily disclosed to the United States Attorney’s Office and the Federal Bureau of Investigation certain misconduct occurring at Take 5. We intend to cooperate in this and any other governmental investigations that may arise in connection with the Take 5 Matter.
We and the Take 5 Sellers engaged in arbitration proceedings. In October 2022, the arbitrator made a final award in our favor. We are actively pursuing the collection of this award in state court in Florida. We are currently unable to estimate if or when we will be able to collect any amounts associated with this arbitration.
In October 2022, an arbitrator made a final award in our favor. We are actively pursuing the collection of this award. We are currently unable to estimate if or when we will be able to collect any amounts associated with this arbitration.
We have retained outside counsel to represent us in these matters and we are vigorously defending our interests. 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 (“PAGA”).
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, waiting time penalties and other penalties.
Many involve allegations 28 for allegedly failing to pay wages and/or overtime, failing to provide meal and rest breaks and failing to pay reporting time pay, waiting time penalties and other penalties. Proceedings Relating to Take 5 In April 2018, we acquired the business of Take 5 Media Group (“Take 5”).
Removed
Proceedings Relating to Take 5 The following proceedings relate to the Take 5 Matter, which is discussed in greater detail in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Take 5 Matter ” and “ Risk Factors — Risks Related to the Company’s Business and Industry ” in this Annual Report.
Added
Commercial Matters We have been involved in various litigation matters and arbitrations with respect to commercial matters arising with clients, vendors and third-party sellers of businesses. We have retained outside counsel to represent us in these matters and we are vigorously defending our interests.
Removed
At this time, we cannot predict the ultimate outcome of any investigation related to the Take 5 Matter and are unable to estimate the potential impact such an investigation may have on us.
Added
As a result of an investigation into that business in 2019 that identified certain misconduct, we terminated all operations of Take 5 in July 2019 and offered refunds to clients of collected revenues attributable to the period after our acquisition.
Removed
In August 2019, as a result of the Take 5 Matter, we provided a written indemnification claim notice to the sellers of Take 5, or the Take 5 Sellers, seeking monetary damages (including interest, fees and costs) based on allegations of breach of the asset purchase agreement (the “Take 5 APA”), as well as fraud.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2023, there remained $81.1 million of share repurchase availability under the 2021 Share Repurchase Program as of December 31, 2023.
Biggest changeAs of December 31, 2024, there remained $47.1 million of share repurchase availability under the 2021 Share Repurchase Program. We did not repurchase any Class A common stock during the three months ended December 31, 2024. Recent Sales of Unregistered Equity Securities None. 30 Item 6. [Reserved]
Any decision to declare and pay dividends in the future will be made at the discretion of the Board of Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant.
Any decision to declare and pay dividends in the future will be made at the discretion of the board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the board of directors may deem relevant.
Purchases of equity securities by the issuer and affiliated purchasers 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 million of our Class A common stock.
Purchases of equity securities by the issuer and affiliated purchasers 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.
As of December 31, 2023, there were 30 holders of record of our Class A common stock and 2 holders of record of our Warrants. Dividend Policy We have not paid any cash dividends on our Class A common stock to date.
As of December 31, 2024, there were 21 holders of record of our Class A common stock and 2 holders of record of our Warrants. Dividend Policy We have not paid any cash dividends on our Class A common stock to date.
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. 30 During the year ended December 31, 2023, we executed open market purchases of $6.4 million of our Class A common stock under the 2021 Share Repurchase Program.
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 year ended December 31, 2024, we executed open market purchases of $34.1 million of our Class A common stock under the 2021 Share Repurchase Program.
The graph assumes an initial investment of $100 in our Class A common stock at the market close on July 18, 2019, which was our initial trading day. Data for the S&P 500 Stock Index and S&P Consumer Staples Select Sector Index assume reinvestment of dividends. Total return equals stock price appreciation plus reinvestment of dividends.
The graph assumes an initial investment of $100 in our Class A common stock at the market close on December 31, 2019. Data for the S&P 500 Stock Index and S&P Consumer Staples Select Sector Index assume reinvestment of dividends. Total return equals stock price appreciation plus reinvestment of dividends.
Stock Price Performance The graph above compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P Consumer Staples Select Sector Index.
We do not anticipate declaring any cash dividends to holders of the Class A common stock in the foreseeable future. 29 Stock Price Performance The graph above compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P Consumer Staples Select Sector Index.
In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding 29 indebtedness we or our subsidiaries incur. We do not anticipate declaring any cash dividends to holders of the Class A common stock in the foreseeable future.
In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur.
Removed
The following tables sets forth repurchases of our Class A common stock during the year ended December 31, 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet to be purchased under the program (in thousands) November 21, 2023 to November 30, 2023 (1) 378,382 $ 2.71 1,988,396 $ 86,407 December 1, 2023 to December 31, 2023 (1) 1,611,679 $ 3.32 3,600,075 $ 81,051 Total 1,990,061 (1) Open market and privately negotiated purchases In December 2023, the Company entered into a trading plan under Rule 10b5-1 of the Exchange Act authorizing the repurchase of shares of our Class A common stock.
Removed
From January 2, 2024 to February 29, 2024, we purchased 3.0 million shares of our Class A common stock. No stock repurchases were made pursuant to this plan for the year ended December 31, 2023. Recent Sales of Unregistered Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(a) (2,524 ) (6,934 ) (10,313 ) Fair value adjustments related to contingent consideration related to acquisitions (b) 10,362 4,774 4,562 Acquisition and divestiture related expenses (c) 7,024 21,039 20,173 Reorganization expenses (d) 57,021 6,094 12,502 Litigation expenses (recovery) (e) 9,519 5,357 (910 ) Costs associated with COVID-19, net of benefits received (g) 3,283 7,208 (991 ) (Recovery from) costs associated with the Take 5 Matter (j) (1,380 ) 2,465 4,901 Stock-based compensation expense (l) 42,880 39,825 34,602 EBITDA for economic interests in investments (m) (6,402 ) (12,888 ) (13,437 ) Adjusted EBITDA $ 424,347 $ 435,995 $ 521,178 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: Sales Segment Year Ended December 31, 2023 2022 2021 (in thousands) Operating (loss) income $ 38,443 $ (1,323,192 ) $ 182,529 Add: Depreciation and amortization 154,891 161,385 170,076 Impairment of goodwill and indefinite-lived assets 43,500 1,421,719 — Gain on deconsolidation of subsidiaries (58,891 ) — — Loss on divestitures 14,911 2,863 — Equity-based compensation of Karman Topco L.P.
Biggest change(b) 723 (2,524 ) (6,934 ) Fair value adjustments related to contingent consideration related to acquisitions (c) 1,678 11,152 6,572 Acquisition and divestiture related expenses (d) (1,168 ) 3,206 18,950 Restructuring expenses (e) 30,051 — — Reorganization expenses (f) 88,800 56,133 5,971 Litigation (recovery) expenses (g) (1,940 ) 9,519 5,357 Costs associated with COVID-19, net of benefits received (h) — 3,283 7,208 Costs associated with the Take 5 Matter, net of (recoveries) (i) 1,845 (1,380 ) 2,465 EBITDA for economic interests in investments (j) 20,266 (6,128 ) (13,686 ) Adjusted EBITDA from Continuing Operations $ 356,014 $ 352,248 $ 358,493 Reconciliations of Adjusted EBITDA from Discontinued Operations to Net income from discontinued operations is provided in the following table: Discontinued Operations Year Ended December 31, (in thousands) 2024 2023 2022 Net income from discontinued operations, net of tax $ 53,634 $ 20,829 $ 41,350 Add: Interest expense, net 48 68 72 Provision for income taxes from discontinued operations 41,318 8,639 13,104 Depreciation and amortization 4,695 15,841 17,029 (Gain) loss on divestitures (k) (95,099 ) 19,068 — Stock-based compensation expense (a) (2,808 ) 3,947 4,724 Fair value adjustments related to contingent consideration related to acquisitions (c) 1,883 (790 ) (1,798 ) Acquisition and divestiture related expenses (d) 5,537 3,818 2,089 Reorganization expenses (f) 9,535 888 124 EBITDA for economic interests in investments (j) (384 ) (274 ) 798 Adjusted EBITDA from Discontinued Operations $ 18,359 $ 72,034 $ 77,492 44 Financial information by segment, including a reconciliation of Adjusted EBITDA by Segment to operating (loss) income is provided in the following table: Branded Services segment Year Ended December 31, (in thousands) 2024 2023 2022 Operating (loss) income $ (318,573 ) $ 27,193 (757,258 ) Add: Depreciation and amortization 130,212 140,932 144,354 Impairment of goodwill and indefinite-lived asset 275,170 43,500 831,008 Gain on deconsolidation of subsidiaries — (58,891 ) — Loss on divestitures — — 2,863 Stock-based compensation expense (a) 12,391 15,651 10,120 Equity-based compensation of Karman Topco L.P.
Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense. • Impairment of Goodwill and Indefinite-Lived Assets.
Unlike depreciation expense which has an economic cost reflected by the fact that we must re-invest in property and equipment to maintain the asset base delivering our results of operations, we do not have any capital re-investment requirements associated with the acquired intangible assets, such as client relationships and trade names, that comprise the majority of the finite-lived intangible assets that create our amortization expense. • Impairment of Goodwill and Indefinite-Lived Asset.
We also incur expenses operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and professional services.
We also incur expenses operating as a public company, including expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and related professional services.
Other Expenses Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents a non-cash (income) expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants.
Other (Income) Expenses Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents a non-cash (income) expense resulting from a fair value adjustment to warrant liability with respect to the private placement warrants.
We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period.
We present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period.
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.
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.
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.
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.
On December 2, 2022, Borrower, Holdings and certain of the Borrower’s subsidiaries, entered into the Second Amendment to ABL Revolving Credit Agreement (the “Second Amendment”), which amends the Revolving Credit Agreement, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent, and the other parties thereto.
On December 2, 2022, Borrower, Holdings and certain of the Borrower’s subsidiaries, entered into the Second Amendment to ABL Revolving Credit Agreement (the “Second Amendment”), which amends the ABL Revolving Credit Agreement, by and among the Borrower, Holdings, the lenders from time to time party thereto and Bank of America, as administrative agent, and the other parties thereto.
Substantially all of our contracts with clients involve the transfer of a service to the client, which represents the performance obligation that is satisfied over time because the client simultaneously receives and consumes the benefits of the services provided.
Substantially all of our 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.
The Term Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the Borrower’s ability and that of our restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant 45 liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.
The Term Loan Facility contains certain customary negative covenants, including, but not limited to, restrictions on the Borrower’s ability and that of our restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.
The Second Amendment was entered into by the Borrower to amend certain terms and provisions of the Second Agreement, including, among other things: (i) increasing the aggregate amount of maximum revolving commitments available from $400 million to $500 million; (ii) replacing the Eurocurrency Rate interest rate metric with a metric based on Term SOFR (as defined in the Second Amendment), whereby applicable borrowings in United States dollars will bear interest at a floating rate based on Term SOFR plus an applicable margin; (iii) reducing each applicable interest rate pricing tier based on the Average Historical Excess Availability (as defined therein) with respect to Term SOFR borrowings, Alternative Currency borrowings, base rate borrowings and Canadian Prime Rate borrowings, in each case for each pricing tier by 0.25% per annum; and (iv) extending the scheduled maturity date of the borrowings to December 2, 2027.
The Second Amendment was entered into by the Borrower to amend certain terms and provisions of the ABL Revolving Credit Agreement, including, among other things: (i) increasing the aggregate amount of maximum revolving commitments available from $400.0 million to $500.0 million; (ii) replacing the Eurocurrency Rate interest rate metric with a metric based on Term SOFR (as defined in the Second Amendment), whereby applicable borrowings in United States dollars will bear interest at a floating rate based on Term SOFR plus an applicable margin; (iii) reducing each applicable interest rate pricing tier based on the Average Historical Excess Availability (as defined therein) with respect to Term SOFR borrowings, Alternative Currency borrowings, base rate borrowings and Canadian Prime Rate borrowings, in each case for each pricing tier by 0.25% per annum; and (iv) extending the scheduled maturity date of the borrowings to December 2, 2027.
The Revolving Credit Facility will require the maintenance of a fixed charge coverage ratio (as set forth in the credit agreement governing the Revolving Credit Facility) of 1.00 to 1.00 at the end of each fiscal quarter when excess availability is less than the greater of $25 million and 10% of the lesser of the borrowing base and maximum borrowing capacity.
The Revolving Credit Facility will require the maintenance of a fixed charge coverage ratio (as set forth in the credit agreement governing the Revolving Credit Facility) of 1.00 to 1.00 at the end of each fiscal quarter when excess availability is less than the greater of $25.0 million and 10% of the lesser of the borrowing base and maximum borrowing capacity.
The Borrower’s ability to draw under the Revolving Credit Facility or issue letters of credit thereunder will be conditioned upon, among other things, the Borrower’s delivery of prior written notice of a borrowing or issuance, as applicable, the Borrower’s ability to reaffirm the representations and warranties contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.
The Borrower’s ability to draw under the Revolving Credit Facility or 48 issue letters of credit thereunder will be conditioned upon, among other things, the Borrower’s delivery of prior written notice of a borrowing or issuance, as applicable, the Borrower’s ability to reaffirm the representations and warranties contained in the credit agreement governing the Revolving Credit Facility and the absence of any default or event of default thereunder.
The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for, the reporting units’ revenue growth rates, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, terminal growth rate, discount rate, and incremental net working capital, all of which require significant management judgment.
The income approach utilizes estimates of discounted cash flows of the reporting units, which requires assumptions for the reporting units’ revenue growth rates, earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins, terminal growth rates, discount rates, and incremental net working capital, all of which require significant management judgment.
It is difficult to predict with any precision the amount of expense we may record relating to future acquired intangible assets. Depreciation Expense Depreciation expense relates to the property and equipment that we own, which represented less than 1% of our total assets at December 31, 2023.
It is difficult to predict with any precision the amount of expense we may record relating to future acquired intangible assets. Depreciation Expense Depreciation expense relates to the property and equipment that we own, which represented less than 1% of our total assets at December 31, 2024 and 2023.
Based on the availability of sufficient observable information, we determine the fair value of the liability classified private placement warrants by approximating the value with the price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.
Based on the availability of sufficient observable information, we 34 determine the fair value of the liability classified private placement warrants by approximating the value with the price of the public warrants at the respective period end, which is inherently less subjective and judgmental given it is based on observable inputs.
We analyze our financial performance, in part, by measuring revenue growth in two ways—revenue growth attributable to organic activities and revenue growth and declines attributable to acquisitions, which we refer to as organic revenues and acquired revenues, respectively. We define organic revenues as any revenues that are not acquired revenues.
We analyze our financial performance, in part, by measuring revenue performance in two ways—revenue growth attributable to organic activities and revenue growth and declines attributable to acquisitions and divestitures, which we refer to as organic revenues and acquired revenues, respectively. We define organic revenues as any revenues that are not acquired revenues.
When such probable threshold is not satisfied, we will constrain some or all of the variable consideration, and such constrained amount will not be recognized as revenue until the probable threshold is met or the uncertainty is resolved and the final amount is known.
When such probable 53 threshold is not satisfied, we will constrain some or all of the variable consideration, and such constrained amount will not be recognized as revenue until the probable threshold is met or the uncertainty is resolved and the final amount is known.
The portion of the cash payment up to the acquisition date fair 43 value of the contingent consideration liability are classified as financing outflows, and amounts paid in excess of the acquisition date fair value of that liability are classified as operating outflows.
The portion of the cash payment up to the acquisition date fair value of the contingent consideration liability are classified as financing outflows, and amounts paid in excess of the acquisition date fair value of that liability are classified as operating outflows.
We believe that by pursuing these 32 organic growth opportunities we will be able to continue to enhance our value proposition to our clients and thereby grow our business. • Acquisitions and Divestitures. We have grown our business in part by acquiring businesses, both domestic and international. Many of our acquisition agreements include contingent consideration arrangements, which are described below.
We believe that by pursuing these organic growth opportunities we will be able to continue to enhance our value proposition to our clients and thereby grow our business. • Acquisitions and Divestitures. We have grown our business in part by acquiring businesses, both domestic and international. Many of our acquisition agreements include contingent consideration arrangements, which are further described below.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 1, 2023.
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on March 1, 2024.
Income Taxes Income tax (benefit) expense and our effective tax rates can be affected by many factors, including state apportionment factors, our acquisition strategy, tax incentives and credits available to us, changes in judgment regarding our ability to realize our deferred tax assets, changes in our worldwide mix of pre-tax losses or earnings, changes in existing tax laws and our assessment of uncertain tax positions.
Income Taxes Income tax expense and our effective tax rates can be affected by many factors, including state apportionment factors, our acquisition and divestiture strategy, tax incentives and credits available to us, changes in judgment regarding our ability to realize our deferred tax assets, changes in our worldwide mix of pre-tax losses or earnings, changes in existing tax laws and our assessment of uncertain tax positions.
We record an adjustment to revenue for differences between estimated revenues and the amounts ultimately invoiced to the client. Adjustments to revenue during the current period related to services transferred during prior periods were not material for the year ended December 31, 2023.
We record an adjustment to revenue for differences between estimated revenues and the amounts ultimately invoiced to the client. Adjustments to revenue during the current period related to services transferred during prior periods were not material for the year ended December 31, 2024.
A number of costs associated with our associates are subject to external factors, including inflation, increases in market specific wages and minimum wage rates at federal, state and municipal levels and minimum pay levels for exempt roles.
A number of costs associated with our teammates are subject to external factors, including inflation, increases in market specific wages and minimum wage rates at federal, state and municipal levels and minimum pay levels for exempt roles.
(m) Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements.
(j) Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements.
Borrowings will bear interest at a floating rate of Term SOFR plus an applicable margin of 4.50% per annum, subject to additional spread adjustment on SOFR ranging from 0.11% to 0.26%.
Borrowings will bear interest at a floating rate of Term SOFR plus an applicable margin of 4.25% per annum, subject to additional spread adjustment on SOFR ranging from 0.11% to 0.26%.
Cost of Revenues Our cost of revenues consists of both fixed and variable expenses primarily attributable to the hiring, training, compensation and benefits provided to both full-time and part-time associates, as well as other project-related expenses.
Cost of Revenues Our cost of revenues consists of both fixed and variable expenses primarily attributable to the hiring, training, compensation and benefits provided to both full-time and part-time teammates, as well as other project-related expenses.
Our organic revenues exclude the impacts of acquisitions and divestitures, when applicable, which improves comparability of our results from period to period. In general, when we acquire a business, the acquisition includes a contingent consideration arrangement ( e.g ., an earn-out provision) and, accordingly, we separately track the financial performance of the acquired business.
Our organic revenues exclude the impacts of acquisitions and divestitures, when applicable, which improves comparability of our results from period to period. In general, when we acquire a business, the acquisition includes a contingent consideration arrangement ( e.g. , an earnout provision) and, accordingly, we separately track the financial performance of the acquired business.
Cash flows used in financing activities during the year ended December 31, 2023 were primarily related to repurchases of Term Loan Facility and Senior Secured Notes debt of $156.6 million, repayment of principal on our Term Loan Facility of $13.6 million, payments of contingent consideration and holdback payments of $6.8 million, and open market purchases of $6.4 million of our Class A common stock under the 2021 Share Repurchase Program.
Cash flows used in financing activities from continuing operations during the year ended December 31, 2023 were primarily related to repurchases of Term Loan Facility and Senior Secured Notes debt of $156.6 million, repayment of principal on our Term Loan Facility of $13.5 million, payments of contingent consideration and holdback payments of $5.8 million, and open market purchases of $6.4 million of our Class A common stock under the 2021 Share Repurchase Program.
Adjusted EBITDA means net loss before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) gain on deconsolidation of subsidiaries, (vii) loss on divestitures, (viii) equity-based compensation of Karman Topco L.P., (ix) changes in fair value of warrant liability, (x) stock-based compensation expense, (xi) fair value adjustments of contingent consideration related to acquisitions, (xii) acquisition and divestiture related expenses, (xiii) costs associated with COVID-19, net of benefits received, (xiv) EBITDA for economic interests in investments, (xv) reorganization expenses, (xvi) litigation expenses, (xvii) recovery from and costs associated with the Take 5 Matter and (xviii) other adjustments that management believes are helpful in evaluating our operating performance.
Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations means net income before (i) interest expense (net), (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill, (vi) changes in fair value of warrant liability, (vii) stock-based compensation expense, (viii) equity-based compensation of Karman Topco L.P., (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition and divestiture related expenses, (xi) (gain) loss on divestitures, (xii) restructuring expenses, (xiii) reorganization expenses, (xiv) litigation expenses (recovery), (xv) costs associated with COVID-19, net of benefits received, (xvi) costs associated with (recovery from) the Take 5 Matter, (xvii) EBITDA for economic interests in investments and (xviii) other adjustments that management believes are helpful in evaluating our operating performance.
Part of our strategy is to generate organic growth by expanding our existing client relationships, continuing to win new clients, pursuing channel expansion, enhancing our service offerings, developing our international platform, delivering operational efficiencies and expanding into logical adjacencies.
Part of our strategy is to generate organic growth by expanding our existing client relationships, continuing to win new clients, pursuing channel expansion, enhancing our service offerings, digital technology solutions, developing our international platform, delivering operational efficiencies and expanding into logical adjacencies.
The First Lien Amendment was entered into by the Borrower to reduce the applicable interest rate on the term loan to 5.25% per annum, resulting in estimated interest savings of approximately $9.9 million or $7.3 million, net of tax, per annum.
The First Lien Amendment was entered into by the Borrower to reduce the applicable interest rate on the term loan from 5.25% to 4.50% per annum, resulting in estimated interest savings of approximately $9.9 million or $7.3 million, net of tax, per annum.
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.
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 from Continuing Operations and Adjusted EBITDA from Discontinued Operations.
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.
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 from Continuing Operations and Adjusted EBITDA from Discontinued Operations.
Adjusted Net Income means net loss before (i) impairment of goodwill and indefinite-lived assets, (ii) gain on deconsolidation of subsidiaries, (iii) loss on divestitures, (iv) amortization of intangible assets, (v) equity-based compensation of Karman Topco L.P., (vi) changes in fair value of warrant liability, (vii) fair value adjustments of contingent consideration related to acquisitions, (viii) acquisition and divestiture related expenses, (ix) costs associated with COVID-19, net of benefits received, (x) net income attributable to noncontrolling interest, (xi) reorganization expenses, (xii) litigation expenses, (xiii) deferred financing fees, (xiv) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xv) recovery from and costs associated with the Take 5 Matter, (xvi) other adjustments that management believes are helpful in evaluating our operating performance, and (xvii) related tax adjustments.
Adjusted Net Income means net loss from continuing operations before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived asset, (iii) gain on deconsolidation of subsidiaries, (iv) equity-based compensation of Karman Topco L.P., (v) changes in fair value of warrant liability, (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses, (xi) amortization of intangible assets, (xii) costs associated with COVID-19, net of benefits received, (xiii) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xiv) costs associated with (recovery from) the Take 5 Matter, (xv) other adjustments that management believes are helpful in evaluating our operating performance, and (xvi) related tax adjustments.
Term Loan Facility The Term Loan Facility consists of a term loan credit facility denominated in U.S. dollars in an aggregate principal amount of $1.149 billion. Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per annum of the principal amount.
Term Loan Facility The Term Loan Facility consists of a term loan credit facility denominated in U.S. dollars in an aggregate principal amount of $1.106 billion. Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.00% per 49 annum of the principal amount.
(g) Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief.
(h) Represents (i) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line teammates, medical benefit payments for furloughed teammates, and personal protective equipment; and (ii) benefits received from government grants for COVID-19 relief.
We assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and recorded a deferred tax liability of approximately $0.4 million of withholding tax as of December 31, 2023 for unremitted earnings in Canada with respect to which we do not have an indefinite reinvestment assertion.
We assessed our determination as to our indefinite reinvestment intent for certain of our foreign subsidiaries and recorded a deferred tax liability of approximately $0.6 million of withholding tax as of December 31, 2024 for unremitted earnings in Canada with respect to which we do not have an indefinite reinvestment assertion.
Adjusted Net Income means net (loss) income before (i) amortization of intangible assets, (ii) impairment of goodwill and indefinite-lived assets (iii) gain on deconsolidation of subsidiaries, (iv) loss on divestitures (v) equity-based compensation of Karman Topco L.P., (vi) changes in fair value of warrant liability, (vii) fair value adjustments of contingent consideration related to acquisitions, (viii) acquisition and divestiture related expenses, (iv) costs associated with COVID-19, net of benefits received, (x) net income attributable to noncontrolling interest, (xi) reorganization expenses, (xii) litigation expenses, (xiii) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xiv) deferred financing fees, (xv) recovery from and costs associated with the Take 5 Matter, (xvi) other adjustments that management believes are helpful in evaluating our operating performance, and (xvii) related tax adjustments.
Adjusted Net Income means net loss from continuing operations before (i) net income attributable to noncontrolling interest, (ii) impairment of goodwill and indefinite-lived asset, (iii) gain on deconsolidation of subsidiaries, (iv) equity-based compensation of Karman Topco L.P., (v) changes in fair value of warrant liability, (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses, (xi) amortization of intangible assets, (xii) costs associated with COVID-19, net of benefits received, (xiii) gain on repurchases of Term Loan Facility and Senior Secured Notes debt, (xiv) costs associated with (recovery from) the Take 5 Matter, (xv) other adjustments that management believes are helpful in evaluating our operating performance, and (xvi) related tax adjustments.
If at a point in the future our assertion changes, we will evaluate tax-efficient means to repatriate the income.
If at a point in the future our assertion changes, we will evaluate tax-efficient means to repatriate the earnings.
Revenue Recognition We recognize revenues when control of promised goods or services are transferred to the client in an amount that reflects the consideration that we expect to be entitled to in exchange for such goods or services.
Revenue Recognition We recognize revenue when control of promised goods or services is transferred to the client in an amount that reflects the consideration that we expect to be entitled to in exchange for such goods or services.
Interest and maturity Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 at a rate of 6.50% per annum, commencing on May 15, 2021. The Notes will mature on November 15, 2028.
Interest and maturity Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 at a rate of 6.50% per annum, commencing on May 15, 2021.
Refer to Note 7 — Debt of our audited consolidated financial statements for the year ended December 31, 2023 for additional information regarding the maturities of debt principal. Total debt excluding deferred issuance costs does not include the obligation of future interest payments.
Refer to Note 8 — Debt of our audited consolidated financial statements for the year ended December 31, 2024 for additional information regarding the maturities of debt principal. Total debt excluding deferred issuance costs does not include the obligation of future interest payments.
This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Guarantees The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S. subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholds of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.
The Notes will mature on November 15, 2028. 50 Guarantees The Notes are guaranteed by Holdings and each of the Issuer’s direct and indirect wholly owned material U.S. subsidiaries (subject to certain permitted exceptions) and Canadian subsidiaries (subject to certain permitted exceptions, including exceptions based on immateriality thresholds of aggregate assets and revenues of Canadian subsidiaries) that is a borrower or guarantor under the Term Loan Facility.
Adjusted Net Income The decrease in Adjusted Net Income for the year ended December 31, 2023 was attributable to the decrease in Adjusted EBITDA as described below coupled with the increase in interest expense. For a reconciliation of Adjusted Net Income to Net loss, see “ —Non-GAAP Financial Measures ”.
Adjusted Net Income The decrease in Adjusted Net Income for the year ended December 31, 2024 was attributable to the increase in Adjusted EBITDA as described below coupled with the decrease in interest expense. For a reconciliation of Adjusted Net Income to Net loss from continuing operations, see “ —Non-GAAP Financial Measures ”.
Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive (Loss) Income. • Depreciation and Amortization.
Adjustments to the estimated fair value related to changes in unobservable inputs are reported in “Selling, general and administrative expenses” in our Consolidated Statements of Operations and Comprehensive Loss. • Depreciation and Amortization.
The following table represents a sensitivity analysis on the indefinite-lived sales trade name intangible asset depicting the percent increase in the $43.5 million charge related to the indefinite-lived sales trade name had the fair value been estimated with a 0.1% increase in the discount rate used and a 0.1% decrease in the royalty rate used at December 31, 2023.
The following table represents a sensitivity analysis on the indefinite-lived trade name intangible asset depicting the percent increase in the $42.0 million charge related to the indefinite-lived trade name had the fair value been estimated with a 0.1% increase in the discount rate used and a 0.1% decrease in the royalty rate used at December 31, 2024.
(3) We have an aggregate principal amount of $1.149 billion borrowing on the Term Loan Facility, which bears the applicable interest rate of 5.25% per annum, and $743.0 million in Senior Secured Notes, which is subject to a fixed interest rate of 6.5%.
(3) We have an aggregate principal amount of $1.106 billion borrowing on the Term Loan Facility, which bears the applicable interest rate of 4.25% per annum, and $615.1 million in Senior Secured Notes, which is subject to a fixed interest rate of 6.5%.
Adjusted Net Income should not be considered as an alternative for our net (loss) income, our most directly comparable measure presented on a GAAP basis.
Adjusted 35 Net Income should not be considered as an alternative for Net loss from continuing operations, our most directly comparable measure presented on a GAAP basis.
All revenues generated by our acquired businesses are considered to be organic revenues after the 12-month anniversary of the date of acquisition. When we divest a business, we consider the revenues that the divested business generated in the 12 months prior to its divestiture to be subtracted from acquired revenues for the 12 months following its divestiture.
All revenues generated by our acquired businesses are considered to be organic revenues after the 12-month anniversary of the date of acquisition. 33 When we divest a business, unless otherwise presented as discontinued operations, we consider the revenues that the divested business generated in the 12 months prior to its divestiture to be subtracted from acquired revenues for the 12 months following its divestiture.
We present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance.
We present Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations and Adjusted EBITDA by Segment because they are key operating measures used by us to assess our financial performance.
We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from the estimates. In connection with our annual quantitative impairment test effective as of October 1, 2023, we concluded that our indefinite-lived intangible assets were not impaired.
We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from the estimates. 55 In connection with our annual quantitative impairment tests as of October 1, 2024 and 2023, we concluded that our indefinite-lived intangible asset was not impaired.
For example, if we completed an acquisition on July 1, 2022 for a business that did not include a contingent consideration arrangement, we would consider the amount of revenues from the acquired business from July 1, 2021 to June 30, 2022 to be acquired revenues during the period from July 1, 2022 to June 30, 2023, with any differences from that amount actually generated during the latter period to be organic revenues.
For example, if we completed an acquisition on September 30, 2024 for a business that did not include a contingent consideration arrangement, we would consider the amount of revenues from the acquired business from October 1, 2023 to September 30, 2024 to be acquired revenues during the period from October 1, 2024 to September 30, 2025, with any differences from that amount actually generated during the latter period to be organic revenues.
Adjusted EBITDA means net loss before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) gain on deconsolidation of subsidiaries, (vii) loss on divestitures, (viii) equity-based compensation of Karman Topco L.P., (ix) changes in fair value of warrant liability, (x) stock-based compensation expense, (xi) fair value adjustments of contingent consideration related to acquisitions, (xii) acquisition and divestiture related expenses, (xiii) costs associated with COVID-19, net of benefits received, (xiv) EBITDA for economic interests in investments, (xv) reorganization expenses, (xvi) litigation expenses, (xviii) recovery from and costs associated with the Take 5 Matter and (xix) other adjustments that management believes are helpful in evaluating our operating performance.
Adjusted EBITDA from Continuing Operations and Adjusted EBITDA from Discontinued Operations mean net loss from continuing operations before (i) interest expense (net), (ii) provision for (benefit from) income taxes, (iii) depreciation, (iv) amortization of intangible assets, (v) impairment of goodwill, (vi) changes in fair value of warrant liability, (vii) stock-based compensation expense, (viii) equity-based compensation of Karman Topco L.P., (ix) fair value adjustments of contingent consideration related to acquisitions, (x) acquisition and divestiture related expenses, (xi) (gain) loss on divestitures, (xii) restructuring expenses, (xiii) reorganization expenses, (xiv) litigation expenses (recovery), (xv) costs associated with COVID-19, net of benefits received, (xvi) costs associated with (recovery from) the Take 5 Matter, (xvii) EBITDA for economic interests in investments and (xviii) other adjustments that management believes are helpful in evaluating our operating performance. 42 Adjusted EBITDA by Segment means, with respect to each segment, operating income (loss) from continuing operations before (i) depreciation, (ii) amortization of intangible assets, (iii) impairment of goodwill, (iv) stock-based compensation expense, (v) equity-based compensation of Karman Topco L.P., (vi) fair value adjustments of contingent consideration related to acquisitions, (vii) acquisition and divestiture related expenses, (viii) restructuring expenses, (ix) reorganization expenses, (x) litigation expenses (recovery), (xi) costs associated with COVID-19, net of benefits received, (xii) costs associated with (recovery from) the Take 5 Matter, (xiii) EBITDA for economic interests in investments and (xiv) other adjustments that management believes are helpful in evaluating our operating performance, in each case, attributable to such segment.
The Notes and related guarantees rank (i) equally in right of payment with all of the Issuer’s and the Guarantors’ senior indebtedness, without giving effect to collateral arrangements (including the Senior Secured Credit Facilities) and effectively equal to all of the Issuer’s and the Guarantors’ senior indebtedness secured on the same priority basis as the Notes, including the Term Loan Facility, (ii) effectively subordinated to any of the Issuer’s and the Guarantors’ indebtedness that is secured by assets that do not constitute collateral for the Notes to the extent of the value of the assets securing such indebtedness and to indebtedness that is secured by a senior-priority lien, including the Revolving Credit Facility to the extent of the value of the current asset collateral and (iii) structurally subordinated to the liabilities of the Issuer’s non-Guarantor subsidiaries. 46 Optional redemption for the Notes The Notes are redeemable at the applicable redemption prices specified in the Indenture plus accrued and unpaid interest.
The Notes and related guarantees rank (i) equally in right of payment with all of the Issuer’s and the Guarantors’ senior indebtedness, without giving effect to collateral arrangements (including the Senior Secured Credit Facilities) and effectively equal to all of the Issuer’s and the Guarantors’ senior indebtedness secured on the same priority basis as the Notes, including the Term Loan Facility, (ii) effectively subordinated to any of the Issuer’s and the Guarantors’ indebtedness that is secured by assets that do not constitute collateral for the Notes to the extent of the value of the assets securing such indebtedness and to indebtedness that is secured by a senior-priority lien, including the Revolving Credit Facility to the extent of the value of the current asset collateral and (iii) structurally subordinated to the liabilities of the Issuer’s non-Guarantor subsidiaries.
Intangible assets with indefinite useful lives are not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances change that would create a triggering event.
The intangible asset with an indefinite useful life is not amortized but tested annually, at the beginning of the fourth quarter, for impairment or more often if events occur or circumstances change that would create a triggering event.
Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of revenues for the year ended December 31, 2023 was 6.3%, as compared to 4.6% for the year ended December 31, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses as a percentage of revenues for the year ended December 31, 2024 was 9.1%, as compared to 6.4% for the year ended December 31, 2023.
For example, if we completed an acquisition on July 1, 2022 for a business that included a contingent consideration arrangement, we would consider revenues from the acquired business from July 1, 2022 to June 30, 2023 to be acquired revenues.
For example, if we completed an acquisition on September 30, 2023 for a business that included a contingent consideration arrangement, we would consider revenues from the acquired business from October 1, 2023 to September 30, 2024 to be acquired revenues.
We consider the majority of the undistributed earnings of our foreign subsidiaries, as of December 31, 2023, to be indefinitely reinvested and, accordingly, no provision has been made for taxes in excess of the $0.4 million noted above.
Excluding Canada, we consider the remaining undistributed earnings of our foreign subsidiaries, as of December 31, 2024, to be indefinitely reinvested and, accordingly, no provision has been made for taxes in excess of the $0.6 million noted above.
As a result, we recognized non-cash intangible asset impairment charges of $43.5 million related to our indefinite-lived sales trade name during the year ended December 31, 2023, which has been reflected in “Impairment of goodwill and indefinite-lived assets” in the Consolidated Statements of Comprehensive (Loss) Income.
As a result, we recognized an intangible asset impairment charge of $43.5 million related to our indefinite-lived trade name during the year ended December 31, 2023, which has been reflected in “Impairment of goodwill and indefinite-lived asset” in the Consolidated Statements of Operations and Comprehensive Loss.
We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical.
Actual results may differ from these estimates under different assumptions and conditions. 52 We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical.
Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for net loss or operating income (loss), respectively, our most directly comparable measures presented on a GAAP basis.
None of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations nor Adjusted EBITDA by Segment should be considered as an alternative for Net loss or operating (loss) income, our most directly comparable measures presented on a GAAP basis.
We evaluate our accounting policies, estimates and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.
We evaluate our accounting policies, estimates and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances.
(e) Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities. (f) Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.
(e) Represents fees and costs associated with various internal reorganization activities, including professional fees, lease exit costs, severance, and nonrecurring compensation costs. (f) Represents legal settlements, reserves, and expenses that are unusual or infrequent costs associated with our operating activities. (g) Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.
For example, if we completed a divestiture on July 1, 2022 for a business, we would consider the amount of revenues from the divested business from July 1, 2021 to June 30, 2022 to be subtracted from acquired revenues during the period from July 1, 2022 to June 30, 2023.
For example, if we completed a divestiture on October 1, 2024 for a business, we would consider the amount of revenues from the divested business from October 1, 2023 to September 30, 2024 to be subtracted from organic revenues during the period from October 1, 2024 to September 30, 2025.
Recently Issued Accounting Pronouncements Refer to Note 1, Organization and Significant Accounting Policies – Recent Accounting Pronouncements , to our audited consolidated financial statements included elsewhere in this Annual Report.
Refer to Note 12— Stock Based Compensation and Other Benefit Plans to our audited consolidated financial statements included elsewhere in this Annual Report for details regarding stock-based compensation plans. Recently Issued Accounting Pronouncements Refer to Note 1— Organization and Significant Accounting Policies – Recent Accounting Pronouncements , to our audited consolidated financial statements included elsewhere in this Annual Report.
Executive Overview We are a leading business solutions provider to consumer goods manufacturers and retailers. We have a strong platform of competitively advantaged sales and marketing services built over multiple decades – essential, business critical services like headquarter sales, retail merchandising, in-store sampling, digital commerce and shopper marketing.
Executive Overview We are a leading business solutions provider to consumer goods manufacturers and retailers. We have a strong platform of essential, business critical services like headquarter sales, retail merchandising, in-store sampling and private brand development.
Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents $0.3 million of non-cash gain resulting from a fair value adjustment to the warrant liability for the private placement warrants for the year ended December 31, 2023.
Change in Fair Value of Warrant Liability Change in fair value of warrant liability represents $0.6 million and $0.3 million of non-cash income resulting from fair value adjustments to the warrant liability for the private placement warrants for the years ended December 31, 2024 and 2023, respectively.
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.
See also “ —Quantitative and Qualitative Disclosure of Market Risk—Foreign Currency Risk. ” • Seasonality. 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 continue to evaluate opportunities to further simplify our operations so we can focus more resources on our core businesses. • Contingent Consideration. Many of our acquisition agreements include contingent consideration arrangements, which are generally based on the achievement of financial performance thresholds by the operations attributable to the acquired businesses.
Many of our acquisition agreements include contingent consideration arrangements, which are generally based on the achievement of financial performance thresholds by the operations attributable to the acquired businesses.
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 year ended December 31, 2023, we executed open market purchases of $6.4 million of our Class A common stock under the 2021 Share Repurchase Program.
The 2021 Share Repurchase Program permits the repurchase of our Class A common stock on the open market and in 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.
The impairment charges were due to the deconsolidation of our European joint venture and intended sale of the foodservice businesses. We recognized a $1,367.5 million non-cash goodwill impairment charge and a $205.0 million non-cash intangible asset impairment charge during the year ended December 31, 2022.
We recognized a $43.5 million trade name intangible asset impairment charge during the year ended December 31, 2023 due to the deconsolidation of our European joint venture and intended sale of the foodservice businesses.
In most cases, the contracts include a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer ( i . e ., distinct days of service). We allocate variable consideration to each period of service to which it relates.
In most cases, the contracts provide for a performance obligation that is comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).
See “ —Liquidity and Capital Resources. ” 35 Our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility (as defined below), and other debt. Our principal uses of cash are operating expenses, working capital requirements, acquisitions and repayment of debt. Adjusted Net Income Adjusted Net Income is a non-GAAP financial measure.
See “ —Liquidity and Capital Resources. ” Our principal sources of liquidity are cash flows from operations, borrowings under the Revolving Credit Facility (as defined below), divestitures and other debt. Our principal uses of cash are operating expenses, working capital requirements, investments in our technology platforms, acquisitions, repayment of debt and share repurchases.
Net cash provided by operating activities during the year ended December 31, 2022, consisted of net loss of $1,377.3 million adjusted for certain non-cash items, including depreciation and amortization of $233.1 million and effects of changes in working capital.
Net cash provided by operating activities from discontinued operations during the year ended December 31, 2023, consisted of net income of $20.9 million adjusted for certain non-cash items, including depreciation and amortization of $15.8 million, loss on divestitures of $19.1 million and effects of changes in working capital.
Notwithstanding the foregoing, during the fourth quarter of 2023, we determined a triggering event occurred and an impairment assessment was warranted for the sales indefinite-lived trade name due to the deconsolidation of our European joint venture and the planned divestitures of a collection of foodservice businesses.
Assumption Change % Increase in Impairment Charge 0.5% increase in discount rate 70.6 % 0.1% increase in royalty rate 40.0 % During the fourth quarter of fiscal year 2023, we determined a triggering event occurred and an impairment assessment was warranted for our indefinite-lived trade name due to the deconsolidation of our European joint venture and the planned divestitures of a collection of foodservice businesses.
If the Issuer or its restricted subsidiaries sell certain of their respective assets or experience specific kinds of changes of control, subject to certain exceptions, the Issuer must offer to purchase the Notes at par.
Optional redemption for the Notes The Notes are redeemable at the applicable redemption prices specified in the Indenture plus accrued and unpaid interest. If the Issuer or its restricted subsidiaries sell certain of their respective assets or experience specific kinds of changes of control, subject to certain exceptions, the Issuer must offer to purchase the Notes at par.
(i) Represents a gain associated with the repurchases of Term Loan Facility and Senior Secured Note debt. For additional information, refer to Note 7—Debt of our audited consolidated financial statements for the year ended December 31, 2023.
(i) Represents gains associated with the repurchases of Term Loan Facility and Senior Secured Notes, net of deferred financing fees related to repricing of Term Loan Facility. For additional information, refer to Note 8— Debt to our consolidated financial statements for the years ended December 31, 2024 and 2023.
Neither Adjusted EBITDA nor Adjusted EBITDA by segment should be considered as an alternative for our net 40 (loss) income or operating (loss) income, respectively, our most directly comparable measures presented on a GAAP basis.
None of Adjusted EBITDA from Continuing Operations, Adjusted EBITDA from Discontinued Operations nor Adjusted EBITDA by Segment should be considered as an alternative for our Net income from discontinued operations, our most directly comparable measure presented on a GAAP basis.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe estimate that had the exchange rate in each country unfavorably changed by ten percent relative to the U.S. dollar, our consolidated loss before income taxes would have increased by approximately $11.9 million for the year ended December 31, 2023. 51 Interest Rate Risk Interest rate exposure relates primarily to the effect of interest rate changes on borrowings outstanding under the Term Loan Facility, Revolving Credit Facility and Notes.
Biggest changeWe 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 year ended December 31, 2024.
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 Consolidated Statements of Operations and Comprehensive (Loss) Income.
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 Consolidated Statements of Operations and Comprehensive Loss.
The cumulative translation effects for subsidiaries using a functional currency other than the U.S. dollar are included in accumulated other comprehensive (loss) income as a separate component of stockholders’ equity.
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.
Item 7A. 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 primarily domiciled in Europe and Canada. We use financial derivative instruments to hedge foreign currency exchange rate risks associated with our Canadian subsidiary.
Item 7A. 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 primarily domiciled in Canada. We use financial derivative instruments to hedge foreign currency exchange rate risks associated with our Canadian operations.
The assets and liabilities of our foreign subsidiaries and foreign branches, whose functional currencies are primarily the Canadian dollar, British pound and euro, 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 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.
Holding other variables constant, a change of one-eighth percentage point in the weighted average interest rate above the floor of 0.75% on the Term Loan Facility and 0.00% on Revolving Credit Facility would have resulted in an increase of $0.9 million in interest expense, net of gains from interest rate caps, for the year ended December 31, 2023.
Holding other variables constant, a change of one-eighth percentage point in the weighted average interest rate above the floor of 0.75% on the Term Loan Facility and Revolving Credit Facility would have resulted in an increase of $0.8 million in interest expense, net of gains from interest rate collars and caps, for the year ended December 31, 2024.
In the future, in order to manage our interest rate risk, we may refinance our existing debt, enter into additional interest rate cap agreements or modify our existing interest rate cap agreement. However, we do not intend or expect to enter into derivative or interest rate cap transactions for speculative purposes. 52
In the future, in order to manage our interest rate risk, we may refinance our existing debt, enter into additional interest rate collar agreements or modify our existing interest rate collar agreements. However, we do not intend or expect to enter into derivative or interest rate collar transactions for speculative purposes. 57
We manage our interest rate risk through the use of derivative financial instruments. Specifically, we have entered into interest rate cap agreements to manage our exposure to potential interest rate increases that may result from fluctuations in SOFR.
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.
As of December 31, 2023, we had interest rate cap contracts on $650.0 million of notional value of principal from various financial institutions, with a maturity date of December 16, 2024 to manage our exposure to interest rate movements on variable rate credit facilities when one-months SOFR on term loans exceeds cap of 0.75%.
As of December 31, 2024, we had interest rate collar contracts with an aggregate notional value of $850.0 million principal from various financial institutions to manage our exposure to interest rate movements on variable rate credit facilities. The interest rate collars will mature on April 5, 2026, 2027 and 2028.
We also had interest rate collar contracts with an aggregate notional value of principal of $300.0 million with a maturity date of April 5, 2026. The aggregate fair value of our interest rate caps represented an outstanding net asset of $26.3 million as of December 31, 2023.
The aggregate fair value of our interest rate collars represented an outstanding net asset of $0.8 million as of December 31, 2024.
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Interest Rate Risk Interest rate exposure relates primarily to the effect of interest rate changes on borrowings outstanding under the Term Loan Facility, Revolving Credit Facility and Notes. 56 We manage our interest rate risk through the use of derivative financial instruments.

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