Advantage Solutions Inc (ADV) 2025 Q3 法說會逐字稿

Greetings and welcome to the Advantage Solutions third quarter 2025 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce Vik Mohan. Thank you. And Vik, you may begin.

Thank you, operator. Welcome to Advantage Solutions third quarter 2025 earnings conference call. Dave Peacock, Chief Executive Officer, and Chris Growe, Chief Financial Officer, are on the call today. Dave and Chris will provide their prepared remarks, after which we will open the call for a question-and-answer session.

During this call, management will make forward-looking statements within the meeting of the Federal securities laws. Actual outcomes and results could differ materially due to several factors, including those described more fully in the company's annual report on Form 10k filed with the SEC. All forward-looking statements are qualified in their entirety by such factors.

Our remarks today include certain non-GAAP financial measures which are reconciled to the most comparable GAAP measure in our earnings release. As a reminder, unless otherwise stated, the financial results discussed today will be from continuing operations, and revenues will exclude pass through costs.

And now I would like to turn the call over to Dave Peacock.

Thanks, Vik. Good morning, everyone, and thank you for joining us. Before we begin, I want to acknowledge the continued focus and dedication of our teammates. You are advantage and your commitment to delivering for our clients and customers, especially as they navigate a complex consumer environment, remains central to our success. Starting with our third quarter results, revenues of $781 million were down 2.6% versus prior year. Adjusted EBITDA was $99.6 million a decline of 1.4% versus prior year, a sequential improvement from the second quarter.

This was the result of a strong performance in our experiential segment where demand remains robust. This partially offsets softer trends in branded services and anticipated declines in retailer services due in part to timing shifts. We generated strong cash flow driven by our marked improvement in working capital, resulting in adjusted unlevered free cash flow of $98 million or nearly 100% of EBITDA.

As a result of the strong cash flow generation, we ended the quarter with over $200 million in cash, including the proceeds from the sale of our 7.5% equity stake in Action Food Service. During the quarter, we leveraged the benefits of our structurally diversified platforms, pulling levers in real time across our high-volume labour, business and retailer and experiential. We meaningfully increased hiring activity to meet growing customer demand, enabling the business to execute more events in in-store retail work, which drove strong incremental margins.

Our ability to respond to rapidly changing dynamics with the right data, systems, and talent provides resilience in the near term, while longer-term we remain well positioned for an improving environment across our network businesses, primarily in branded services. As we move into the acceleration phase of our IT transformation and modernization effort, having implemented our new ERP and enterprise data infrastructure, with phase 1 of our SAP and our Oracle EPM environment in place, we are beginning to leverage these systems to drive efficiency gains, improve workforce optimization, increase cash flow, accelerate data integration, and sharpen visibility into performance.

These actions enable us to operate as a truly insight-driven organization even as we continue the remaining phases of our SAP and workday implementations over the next 15 months. We remain committed to establishing a leading data architecture and system foundation to yield operational savings and better data-driven services for our clients and customers. We're advancing the development of our new Pulse system, an AI-enabled end to end decision engine designed to elevate the speed, precision, and impact of our commercial decision making across sales and merchandizing.

This next generation platform will seamlessly integrate Advantage's data intelligence, including unique retail data with dynamic real-time capabilities, augmenting our team's ability to anticipate demand, prioritize actions, and drive efficiency and effectiveness across client workflows. At the same time, we are deepening key strategic partnerships that enhance our technology capabilities and operational reach, most recently through our expanded collaboration with Instacart. By combining their live in-store audit capabilities with Advantage's retail execution network, we're building an alert-based retail model that allows CPG brands to quickly identify and correct on-shelf availability, pricing, and display issues in real time.

This approach leverages Instacart's network of more than 600,000 shoppers alongside our execution expertise to reduce out of stocks, improve compliance, and drive stronger ROI for our customers. We close over 6 million distribution voids and out of stocks each year, and this new partnership will enable us to do more of this and do it faster than anyone in the industry.

The early results of our 200 store pilot have been encouraging, and the partnership will scale into additional markets in 2026. The partnership reinforces our commitment to data-driven execution and technology-enabled growth. We also continue to roll out our centralized labor model, which we believe will significantly strengthen our high volume labor businesses and our retailer and experiential segments over time through increased utilization, which will drive higher retention and ultimately stronger execution for clients and customers.

We see this as providing some benefit in the fourth quarter with acceleration in 2026. Our teams remain laser focused on the fundamentals, deepening customer relationships, elevating our technology platform, and driving better labour utilization in our highest volume service lines. These actions are helping us to operate with more consistency and improved execution in the market, which leads to a better experience for our customers.

Turning to a review of our segments, we are adapting as we continue to operate in a dynamic macro environment. Inflationary pressures and a cautious consumer continue to curb demand. Last quarter we noted that higher income shoppers remained more resilient while value-oriented consumers were becoming more selective, and we saw the trend persist in the third quarter. Accordingly, CPG companies and retailers alike are remaining increasingly cautious and sharply focused on stronger ROI on every dollar deployed. Our platform with its ability to drive efficient execution, informed decisions with data, and improve commercial outcomes positions us well to help our customers compete and win.

In branded services, we faced uncertain market conditions as tariffs, channel shifts, and a softening growth environment continued to influence spending. While the decline in revenues in EBITDA eased sequentially, the business continued to face headwinds. The result was a reduction in commission-based revenues through scope and customer retention that was not fully offset by new customer wins and growth in incremental services within our existing client base.

While the environment remains challenging, we continue to focus on investing back into this business, strengthening our value proposition, and pursuing customers that can benefit from our core offerings both near and long-term. We expect branded services revenues in EBITDA to remain under pressure. However, we are encouraged with a larger pipeline of new business opportunities as we close out the year.

Turning to experiential services, we had a very strong quarter with solid growth in revenues in EBITDA. Demand for events continued to rise, and we responded with increased staffing levels, resulting in higher revenues and incremental margin. Demo event volume grew strongly in the quarter, up 7% on an underlying basis, and execution reached 91%.

We continue to see strong demand signals in this business, and we expect improving execution in the fourth quarter as we enhance our talent acquisition processes even more. Retailer services were down year over year in revenues and EBITDA, as we indicated in our last earnings call. This reflected a difficult year over year comparison and a shift in the timing of some project activity out of the third quarter. We also experienced a negative impact from ongoing channel shift toward club and mass stores, as well as some pressure for more cautious retailer spending.

We remain focused on the controllables as staffing levels and execution rates continue to improve through the quarter, enabling stronger coverage and an ability to satisfy demand for projects. We view these staffing improvements along with a healthy project pipeline as leading indicators of stabilization and recovery and are well positioned for improving revenues in EBITDA in the fourth quarter and beyond.

While consumer behaviour remains challenging, effective execution, transformation enabled technology, a solid project pipeline, and accelerating customer demand gives us confidence in the long-term trajectory of the business. Our diversified business model, which includes high volume labour businesses, creates operating leverage in the disciplined execution, we can redeploy teams and flex staffing to meet customer demand, creating outsized incremental margin growth in the business. We also continue to improve our productivity through AI initiatives which are accelerating efficiencies in our back office as well as sales tools and data analysis while engaging with vendors to build platforms and applications at scale.

Taking into account our expectations for the fourth quarter, we are reiterating our revenue growth guidance of flat to down low single-digits for the year. We are updating our EBITDA guidance for the year to include the Action Food Service divestiture, as well as the challenging macro environment, especially affecting our branded services segment, and now expect mid-single-digit decline.

We continue to expect unlevered free cash flow to be greater than 50% of EBITDA. We are encouraged by this strong cash flow performance despite the negative impact from a timing shift of our payroll period weighing on the working capital in the fourth quarter. We expect cash flow generation to remain strong, driven by continued working capital improvements, lower caps, and benefits from our labour and efficiency initiatives.

Our business is built to generate consistent cash flow, and as the transformation investments taper and our modernization work takes hold, we continue to expect strong cash conversion going forward. We are confident in the trajectory of the business and are taking the right long-term actions to strengthen our position and restore growth. We continue to focus on discipline and execution while improving our systems, technology, and labour capabilities.

I'll now pass it over to Chris for more details on our performance and guidance.

Thank you, Dave, and welcome to all of you joining the call today. I will review our third quarter 2025 performance by segment. Discuss our cash flow and capital structure and expand on Dave's guidance commentary.

In branded services, we generated $258 million of revenues and $42 million of adjusted EBITDA, down 9% and 15% on a year over year basis respectively. This segment continues to experience challenges, mainly within the sales brokerage business, which we are working expeditiously to address, as well as our omni-commerce marketing business. The softer growth environment for consumer-packaged goods companies has weighed on our organic growth performance, and we continue to see some pressure around insourcing, which has been a headwind to growth.

However, we took cost actions earlier in the year to improve our efficiency. We maintained a robust pipeline of new business opportunities, offering confidence in our ability to move towards stabilization in 2026. In experiential services, we generated $274 million of revenues and $35 million adjusted EBITDA, up 8% and 52% on a year over year basis respectively. Solid execution and the continued improvement in staffing levels enabled our teams to execute more events in the quarter.

We were able to pull operational levers during the quarter to accommodate growing demand that was again ahead of our expectations. Events per day increased by 7% versus the prior year on an underlying basis, and we see momentum accelerating into the fourth quarter. Execution rates were approximately 91% and given strong fixed cost leverage, we saw EBITDA margin improvement of 370 basis points year over year and up strongly on a sequential basis.

We are beginning to roll out of our centralized labor model for part of our experiential business with the goal of further improving our efficiency, which will also support a better teammate experience as our teammates access an opportunity to garner more hours in the store. In retailer services, we generated $249 million of revenues and $23 million adjusted EBITDA, down 6% and 22% on a year over year basis respectively.

As expected, we faced a challenging comparison to the prior year period, and results were impacted by project activity timing. Additionally, advisory and agency work were impacted by channel mix. We are developing more bespoke services to increase our value add to retailers and focusing on expanding our services beyond the grocery store to other retail outlets. We maintain a strong and growing pipeline of new business opportunities in this segment. Across the businesses, shared service costs were down year over year in the quarter, which benefited profitability in all segments and reflects the stabilization of costs we expect to continue.

Moving to the balance sheet and cash flow, we ended the quarter with $201 million in cash on hand, a notable increase of $103 million in the second quarter, driven by the improvement in working capital, namely DSOs, and the benefit of the $19 million in proceeds from the sale of our stake in Action Food Service, as well as the $22.5 million in proceeds in July related to the first of two deferred purchase price instalments for June Group. We did not repurchase debt or shares in the quarter.

Our net leverage ratio was 4.4 times adjusted EBITDA, which is down from the second quarter, and we expect it to hold at this level in the fourth quarter. With cash on hand, expectations for stronger cash generation going forward, and approximately $450 million available on our undrawn revolving credit facility, we have ample liquidity to operate the business in the current macroeconomic climate while investing for growth and opportunistically paying down debt.

Turning to cash generation, we ended the quarter at approximately 62 days of sales outstanding, an 8-day improvement from the second quarter as cash collections continue to recover after the transition to our new ERP system. Optimizing DSOs has been a big focus for the organization, and we continue to make progress in reducing DSOs as we move forward into 2026, which will contribute to additional cash flow.

CapEx was $11 million in the quarter. We now expect full year CapEx in the range of $45 million to $55 million moderately below our previous guidance due to the timing of projects occurring this year and continued efficiency in our spending. Adjusted unlevered free cash flow was $98 million in the quarter and the conversion rate was nearly 100% driven by the stronger working capital performance as well as lower than expected capbacks.

In addition, we made progress on transforming and optimizing our portfolio. During the quarter. We monetized our 7.5% stake in Action Food Service for $19 million in cash proceeds. This divesture helps streamline our portfolio and boost our liquidity position. We will continue to capitalize on similar opportunities that make strategic sense going forward.

As they've highlighted, our revenue guidance is unchanged, but we are adjusting our full year EBITDA guidance due to the divesture of our stake in action food service, as well as the more challenging macro environment. We remain encouraged by the sequential progress in 2025. After a challenging first quarter to start the year, we've seen a steady improvement in our operating performance, which has supported a strong revenue and EBITDA trend for the business.

As indicated by our full year guidance, we expect a stable growth trend in revenue in EBITDA in the second half of the year, supported by strong execution across our labor-related businesses. The diversity and resilience of our business model support this improved business performance and provides confidence in our path forward. As Dave mentioned, we continue to expect 2025 adjusted unleveraged free cash flow to be above 50% of adjusted EBITDA.

We lowered our cap spending outlook slightly again this quarter to a range of $45 million to $55 million which will aid unlevered-free cash flow growth for the year. Our expectation for interest expense remains in the range of $140 million to $150 million assuming no additional debt repurchases. Robust cash generation is expected to continue in the fourth quarter, excluding a $45 million year-end payroll shift into 2025 due to timing. We anticipate adjusted on leverage-free cash flow conversion close to 100% and net free cash flow conversion of approximately 30% in the second half.

We continue to expect our restructuring and reorganization expenses to be about half the level of the prior year, which is contributing to our stronger net-free cash flow performance in the second half and the year. Our business is designed for efficient and consistent cash generation, and we expect to return to our typical net-free cash flow conversion rate of at least 25% of adjusted EBITDA next year and beyond as our transformation improves our services and modernizes our processes for more consistent and efficient results.

Thank you for your time. I I'll turn it back over to Dave.

Thanks, Chris. We believe our expertise and range of services position us well to navigate the current macroeconomic environment with resilience and agility. We continue to execute with discipline and advance the foundational work of the company. We are making measurable progress in improving our systems and workforce efficiency, strengthening the backbone of our operations and competitive positioning. At the same time, we continue to make progress toward completing the strategic initiatives that will enable Advantage to reach its full potential as a technology-driven industry-leading service provider and generate meaningful cash flow for our shareholders.

Operator, we are now ready for a Q&A session.

(Operator Instructions) Luke Morrison - Analyst

Hey guys. Thanks for taking the question. So maybe just to start here, discussing the EBITDA outlook and the minor, trend there, can you just frame. Like how much of that change was related to the divestiture versus, core operations?

Yeah I can go. Hi, Luke, and good to speak to you. Welcome to Advantage. In the fourth quarter, so we had an EBITDA contribution from that stake, like we do with other, joint ventures that we have. It's a relatively small piece of the fourth quarter and, outside of that, obviously you have, there's this. Overall challenging macro backdrop that I'd say, but I just say we're, bringing down a little bit, and there's one element of like business mix that we're seeing stronger growth from experiential versus branded as an example. So, there's a little bit from the divesture and a little bit from that just general macro environment that we're incorporating into the guidance here.

Got it. Makes sense. And then maybe just like thinking bigger picture, longer-term, it sounds like. Experiential continues to outperform branded services and retailer are kind of softer and lagging.Can you just talk about like how you see the overall portfolio mix. Evolving as we enter.2026, do you expect. Experiential to remain the primary growth driver and do you see stabilization and granted in retailer returning the Model To a more balanced footing?

Yeah, leave this date. Yeah, we do see experiential continuing to perform well and we see continued demand in that segment. And then as it relates to branded and retailer, and we talked about it in the second quarter and just here again retailer is really facing a little bit of an anomaly in the third quarter and we feel very good about the retailer segment and its outlook as we move into 2026, especially the merchandizing services which is the largest component of that of that business and then on the branded side. We expect sequential improvement as we move through 2026. Obviously, the macro backdrop affects that segment, more than the others, but we recognize that the efforts we're undergoing to kind of get the business back where it needs to go or starting to pay off and our pipeline. For the fourth quarter as we end the year of the business is very strong, so we have optimism of a more stabilized brand of services as we move into 2026.

(Operator Instructions) Greg Parrish Morgan Stanley - Analyst

Hey guys, good morning, thanks for taking my question here, maybe to start, I just thought it'd be, good to hear maybe, an update on the market and the consumer obviously hearing a lot of softness out there, especially on the lower income side, this week even from some restaurants so maybe kind of just update us on what you're hearing from your clients in store.

Yeah, thanks Greg, and I'm glad you asked that question. We make the rounds with leadership across most of our clients and customers, on a quarterly basis, and obviously everyone's been tracking the consumer and retail names pretty closely over the last couple of weeks, and a little bit mixed. You see some positive, results for some, but for the most part you're seeing guidance down or.A little more of a negative tone relative to the consumer. I do think we've got two realities. You've got call it higher income consumers, still remaining resilient, still shopping, still.

Realizing trip and what have you, but when you think of all the things that have hit consumers more broadly and especially those on the lower end, you've got, pricing that that largely rolled out, at least in the businesses that we work with, not all of them, but a lot of them in the kind of late second quarter, early 3rd quarter, and that was a byproduct of. Tariffs or tariff concerns as a byproduct of commodities with in some large categories. You've got to continue GLP-1, which on the food side, does have some effect on demand. And then you just, if you look kind of longer-term, you've got, a little bit more constrained population growth and, it's not just, immigration reform, but it's also, birth rate is actually if you look kind of back a few years and look forward, it's lower.

So, I think that's created some of the environment we have now, I think there's. A belief that there's some cyclicality to those, some of those dynamics, if you think of the NGLP1, there'll be a lapping of that eventually and the growth of the adoption of that will slow, number one. Number two, I think you see a lot of, CPGs and even the private label side, leaning into innovation and innovation can spark growth within these categories. And then you have different realities across different categories.

So, categories that are, protein centric, categories that, are expand, expandable consumption, categories that lean a little bit more on the health orientation, continue to show pretty strong growth. And then you've got obviously other categories. Maybe they're struggling a little bit. So, I think that it's, as we move to 26, a little bit of cautious optimism, the 25 was a pretty tough year for the consumer and some hope that some of the factors on the margins that have affected the consumer, especially on the low end, are mitigated a bit and taper a bit as we move to the 26.

Great, that's super helpful. Thank you.

(Operator Instructions) Faiza Alwy Deutsche Bank AG - Analyst

Yes, hi, thank you so much. I wanted to, you mentioned, timing as it relates to retailer services, and it sounded like you're a little bit more optimistic on that business as we look ahead, so just talk a bit more, just put a finer point on the timing issues and talk more about, the visibility and pipeline that you're seeing into next year.

Sure, thanks, guys. To be clear, so third quarter was a combination of a difficult comp due to the timing of project work last year, not all of which is going to be repeated this year, and then also the timing of some project work as you saw in the second quarter, retailer had a pretty strong quarter. And we do anticipate improvement in the fourth quarter, when we zoom out and look at the year, because I know we all look quarter to quarter, but I like to look at the year, the retailer segment will be, for us I think largely in line with expectations, but for some of this kind of macro consumer impact that's obviously affected retailers.

That that hits, probably a little bit of our advisory business, a little bit on the merchandizing services side only in the retailers will pull back investment a bit on the project work. The continuity work, continues, but, it is important to understand that the continuity work is also funded by, a flow through of revenue for the retailer. And then when we talk about the pipeline as we go into 2026, our business development team and we, we've really redoubled efforts there, has really done a nice job building a pipeline really across if you will, all our segments, but especially the branded segment.

And we're seeing, just better success as it relates to the closing on opportunities. So, we're optimistic as we look out in the 26 in the ability as we lean into this business development effort, and it's a byproduct of, all the work that's been done by our teams around. Talent upgrades, which is a combination of so many people but a lot of training, investment in technology and, our data lake is now paying off with more robust and faster data at the fingertips of our sales teams because if you can imagine that's the most critical factor in helping drive client performances. Having, deep and, but I'd say fast insights relative to what's happening with brands and SKU so that they can make decisions around promotion schedules, merchandizing plans, what have you.

Understood, and then I guess just a similar question on branded because I think you, you're saying that you're expecting, declines to moderate into 2026. Like, is that because of, again some of these business development efforts that you're talking about, or do you think like market conditions or the macro environment is likely to improve, into 2026?

I mean, look, I, it's a lot of the work that I was describing for which is both business development and just improving what I call the machine, the sales machine above that underpins that branded services segment because so much of it is in how we represent our clients with retailers on the sales side and the headquarters selling support. And then also on the retail merchandizing side, with our Instacart partnership, especially being able to demonstrate ROI in the services we provide and addressing out of stocks, we mentioned in the prepared remarks, we're close to 6 million out of stocks a year.

If we can leverage the relationship with Instacart to identify those more quickly and close those faster, that's just more sell through, which both benefits us and our clients and then. I mean, look, I believe opinion of one, that the industry, like I mentioned earlier, it has some cyclical aspects this year that likely won't repeat or the industry, as I say, learns to adjust to a new environment and some of the uncertainty and that you heard a lot in the first half that I don't think you're hearing quite as much in the second half, it's probably an example of. The industry, if you will, and companies' kind of learning how to manage in this new reality and you know I personally remain optimistic that the macro market should be a little bit better for the consumer as we move into 2026.

(Operator Instructions) Greg Parrish Morgan Stanley - Analyst

Hey, can you guys hear me? Yeah, I got you, Greg. Yeah, okay, yeah, so I don't know what happened. Perhaps user error. Thanks for coming back. Chris, I just want to clarify on the EBITDA guide. So, I think you said like stable second half, and then, I mean, obviously the mid-single-digits you can kind of plug in a lot of numbers the fourth quarter and get to that. So, you've had improvement every quarter in the year over year EBITDA. third quarter you're down 1. So, like sort of similar level, maybe a little bit better to flattish. How do we think about the year over year 4 Q EITA relative to 3rd Quarter?

Yeah, and I think relative to the 3rd quarter, Greg, there's some, nuances year over year. We do expect experiential to have a very good quarter. We mentioned retailer gets better in the quarter.

There's a tougher cop on the branded services side just given some of the activities of a year ago in the 4th quarter, that that mid-sic growth is. To have a range and you know it would, get you to a relatively flat, second half overall, certainly for revenue, and then like a, flat to down level of EBITDA overall and I think that's just where we keep it right now is right at that level and gives us a little bit of flex for the 4th quarter here.

Okay, fair enough.

Yeah, Greg, I'll jump on Chris's response too. I mean, if you really look at our year, without speaking in detail, the 4th quarter, let's talk about second and 3rd, we all know we had a rough first quarter, and there was a couple of things, we knew when we implemented SAP. That given our business and the fact that working capital is really driven for us by DSO and the impact that implementing SAP can have on cash collection and what have you that from a DSO standpoint it'd be a rough period, we also knew we were transitioning to more centralized talent acquisition and workforce planning.

And with any transition you're going to have bumps, so we have that hiring shortfall. What I'm excited about is the team is hiring it, for us at record pace and doing a great job in bringing in, more and more talent to address the increasing demand we have in the labor parts of our business. I'm also excited and I think we don't always acknowledge. We have had a very good SAP implementation, and we've had, a team that's really pulled together, even amid the challenging kind of broader environment and done a great job and to see our DSOs kind of back to close to where we were at the end of last year, basically realizing about a six month, challenge, just given the implementation, we've all seen some of the other stories of. More difficult or challenged SAP implementations and I just want to note that our team has done a phenomenal job in implementing that it's everything else going on in the industry and I think it's an example of the ability to execute both projects but also on a day-to-day basis and driving the business.

Yeah, okay, thanks for all that color there. Maybe one more each on the segments here maybe just experiential, you've been recovering from labor shortages and like how much of it you talked about demand a lot this quarter so really trying to unpack like how much of this is. Staffing up versus like real demand increases and then you know how do I think about that heading into 26 and like how sustainable is the growth here, especially given the backdrop of, you're recovering from COVID and staffing up, post COVID and then, as we reach normal here, what's going to sustain growth going forward? How do we think about that?

So, events per day grew 7% and execution frankly was only 91%. What that implies is, while we were able to satisfy an extra about 850+ events per day during the quarter, we could have done more. And for us it's why I'm even optimistic about the fourth quarter is to move to 26th because our The fidelity of our hiring and onboarding machine, if you will, is improving every day. And so, and then the demand is there. I mean there was, I would argue unmet demand in the 3rd quarter, that that we could have capitalized on and even with a great, talent acquisition and onboarding process. So, there's more to be had, I think. The other thing you see is what COVID is in this space kind of long in the rearview mirror. There are some retailers that have opportunity to kind of get back to that COVID level.

There are a number of retailers that are at that level or beyond, so we're not doing that comparison back to COVID as we used to do because you know this is now just underlying growth and demand for this business and part of it is, as I mentioned earlier, the innovation that's going on within the industry, number one, especially on the consumable side and then you are seeing, some sampling efforts around, general merchandise and it's crazy as that sounds, but. We've got a program this year with one retailer around toys and and and having kids kind of be able to see in parents so as they as they start planning for holidays. Maybe driving those categories for these retailers a little bit more so this is a a segment that's going to continue to exhibit growth and I'm just really proud of the team for meeting the demand and yet at the same time challenging them every day to continue to find ways to make the experience for our teammates, the best it can be and continue to bring more teammates in to meet this demand.

Hey Greg. So I had a couple points here. I think from a high level what I wanted to add was that these activities and this investment that, retailers and or CPGs make drives a return. So I think with the fact that you've got a return on this investment and you've got enough activity going on, there's a desire to want to lean into it. It also helps drive traffic. So there's a lot of good, features of this business that can help differentiate a retailer. The other thing I wanted to say was that we've had, pretty solid. Pricing here which gives us the ability to offset some of the incremental inflation and labor.

So, and then when I wrap it all together with the incremental demand and the pricing coming through to help offset some of the incremental investments we're making in wages and with our teammates, we've got a really strong incremental margin. So that that really shines through in this quarter, and I think that's something we're, we can, we should continue to see some of that incremental margin benefit as the business continues to grow.

Yeah, okay, that's all very helpful, and maybe just a wrap here, touch on branded, and some of the comments you made with the backdrop. I know you know it's been a very challenging, market there, you called out some new customer losses and then I think you mentioned insourcing on the call here as well if you could unpack those two and are the losses to competitors or is that losses to insourcing or is both happening and then. Is there an uptick of insourcing that you're seeing? I just wanted to, maybe clarify that.

Thanks. Yeah, I think when the comments were made it was a little bit more of a longer-term trend that we've seen relative to insourcing and like most trends that we envision that ultimately, tapering. Because you get to a point where you've kind of insource the accounts if you will, that you want to call on, we've obviously seen some of that this year, that we've had to have had some losses to competitors as well, and then we've had wins, and wins from those very same competitors. In fact, this year was a very good year from the win standpoint.

So, and then we have to look at kind of net losses and wins and we're constantly assessing the drivers and. What I'll call the sales action plan that we started in earnest in the summer, in the early part of the summer was to address the kind of root causes of that and I think this notion of being the fastest in the industry at identifying again the root cause of any sales issue or opportunity. For a brand or SKU and be able to proactively action that on behalf of our clients has been the focus of our efforts.

So, that combination that work, and the upskilling of both the technology and talent, against that with again as you heard a little bit, at least in my view, of some optimism on maybe a little bit better micro environ next year, and the fact that our business development efforts are really bearing some fruit as it relates to pipeline gives us some optimism to. To see that business start stabilizing and obviously improving as we get into the 26.

And I might just add a quick comment on there, Greg, around the just two dynamics we talked about the insourcing. I think that would be the predominant area of loss if you will, but then beyond that just there's been organic growth softness we've talked enough about a challenging macro environment, but that that definitely was a weight on the on the quarter and has been for the year, frankly, so we can't dismiss that because it's a pretty meaningful, contributor to this. Dave mentioned the large pipe. Line that's actually just even accelerated in the third quarter.

Now we can go execute that pipeline. Let's be clear, but that that's something I just say it gives you a lot of optimism, in terms of the business going forward, and I just want to add that one other element around the omni-commerce, there's a marketing business in this as well. It's been, you can look at the industry trends. There's been a little more challenge. That's been also another factor in our softer revenue growth performance in this business.

There are no further questions at this time. I want to turn the call back over to David Peacock for closing comments.

Yeah, we want to thank. Everybody for joining and we look forward to connecting with this group on next quarter and we will talk then.

This concludes today's teleconference. You may disconnect your lines at this time.

Thank you for participating.