BrightView Reports First Quarter Fiscal 2020 Results, Reaffirms Full Year Fiscal 2020 Guidance

BrightView Holdings, Inc. (NYSE: BV) (the “Company” or “BrightView”), the leading commercial landscaping services company in the United States, today reported unaudited results for the first quarter ended December 31, 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200206005104/en/

(Graphic: Business Wire)

First Quarter Fiscal 2020 Highlights

• Total Revenues for the quarter were $570.7 million, an 8.5% increase versus the prior year, with 6.7% higher Maintenance Services Segment revenues and 13.7% higher Development Services Segment revenues;
• Net Loss of $12.6 million, or $(0.12) per share, and a net loss margin of 2.2%, compared to Net Loss of $8.8 million, or $(0.09) per share, and a net loss margin of 1.7%, in the prior year;
• Adjusted EBITDA of $51.7 million and Adjusted EBITDA margin of 9.1%, compared to Adjusted EBITDA of $50.1 million and Adjusted EBITDA margin of 9.5% in the prior year;
• Adjusted Net Income of $10.6 million, or $0.10 per share, compared to Adjusted Net Income of $10.4 million, or $0.10 per share, in the prior year.

“We are pleased with our start to fiscal 2020. We saw another quarter of solid revenue growth in both operating segments and overall Adjusted EBITDA growth for the Enterprise. Our net new sales, which will benefit the upcoming ‘green’ maintenance season, are the highest ever generated; our development project bookings are ahead of last year’s pace and our strong-on-strong acquisition strategy already has to date added four companies with enough expected revenue impact to reach our full year fiscal 2020 targets,” said Andrew Masterman, BrightView President and Chief Executive Officer. “We also continue to make our planned investments in people and technology to support our sales and account manager teams, enhancing our customer relationships and driving both revenue growth and cash generation, that will drive continued value creation for our stockholders.”

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Free Cash Flow and Adjusted Earnings per Share are non-GAAP measures. Refer to the “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” sections for more information.

Fiscal 2020 Results – Total BrightView

For the first quarter of fiscal 2020, total revenue increased 8.5% to $570.7 million due to increases in both Maintenance Services Segment and Development Services Segment revenues. Net Loss was $12.6 million compared to $8.8 million in the 2018 period, attributable to lower income from operations, partially offset by an increase in other income and an increase in the income tax benefit. Total Adjusted EBITDA increased 3.2% driven by an increase in Development Services Segment Adjusted EBITDA, coupled with lower corporate expenses, partially offset by a decrease in Maintenance Services Segment Adjusted EBITDA, as discussed further below.

Fiscal 2020 Results – Segments

For the first quarter fiscal 2020, revenue in the Maintenance Services Segment increased 6.7% to $418.9 million. Acquisitions added 5.9% and snow removal services added 1.5% but these increases were partially offset by a 0.7% negative revenue contribution from commercial landscaping which included lower revenue due to the wind down of Managed Exits and the timing of new contracts.

Adjusted EBITDA for the Maintenance Services Segment in the quarter decreased 2.1% to $47.7 million, with the Adjusted EBITDA Margin decreasing 100 basis points versus the prior year. The decrease in Adjusted EBITDA Margin was principally due to an increase in employee and technology related costs, primarily driven by the timing of expenses related to incentive compensation and the increased investment in our sales and operational leadership teams.

For the first quarter fiscal 2020, revenue in the Development Services Segment increased 13.7% to $152.8 million. Project revenue, derived from the segment’s revenue growth in key markets and strong project pipeline, drove the result.

Adjusted EBITDA for the Development Services Segment increased 12.4% to $19.1 million in the quarter, positively affected by the increase in net revenue described above. Segment Adjusted EBITDA margin was relatively flat compared with the prior year period.

Net cash provided by operating activities for the quarter ended December 31, 2019 was $7.3 million, compared to $6.4 million for the prior year. This increase was primarily due to an increase in cash provided by unbilled and deferred revenue coupled with a decrease in cash used by accounts payable and other operating liabilities, mostly offset by a decrease in cash provided by accounts receivable and an increase in cash used by other operating assets.

Free Cash Flow for the quarter ended December 31, 2019 was $(6.2) million, an increase of $2.9 million versus the prior year. The increase in Free Cash Flow was driven principally by a decline in capital expenditures of $2.8 million.

For the quarter ended December 31, 2019, capital expenditures were $14.5 million, compared with $17.3 million in the prior year. The Company also generated proceeds from the sale of property and equipment of $1.0 million and $1.8 million in the first quarter of fiscal 2020 and 2019, respectively. Net of the proceeds from the sale of property and equipment in the quarter, net capital expenditures represented 2.4% and 2.9% of revenue in the first quarter fiscal 2020 and 2019, respectively.

As of December 31, 2019, the Company’s Total Net Financial Debt was $1,155.1 million, a decrease of $6.3 million compared to $1,161.4 million as of December 31, 2018. The Company’s Total Net Financial Debt to Adjusted EBITDA ratio was 3.8x as of December 31, 2019, compared with 4.1x as of December 31, 2018.

Recent Developments

Acquisition of Signature Coast Holdings, LLC

In January, BrightView acquired Signature Coast Holdings, LLC. (“Signature Coast”) a commercial landscaping company headquartered in Napa, CA. Terms of the transaction were not disclosed.

Signature Coast’s operations span nine strategic locations in both California (Concord, Davis, Marin, Napa, Rocklin, Sacramento and Santa Rosa) and Nevada (Carson City and Reno). The Company provides landscape maintenance, irrigation, enhancement, installation, arbor care, pest control and snow removal services under its three major brands: Coast Landscape Management, Signature Landscapes and C&R Landscape. The Company’s 600 trained and qualified landscape professionals serve clients across the corporate, HOA, multi-family and municipal segments.

Acquisition of Summit Landscape Group, LLC

In January, BrightView acquired Summit Landscape Group, LLC (“Summit”), a commercial landscaping company headquartered in Rock Hill, SC. Terms of the transaction were not disclosed.

Established in 2011, Summit has built a strong reputation among its clients for providing each of them with a comprehensive landscape solution and delivering outstanding workmanship and service beyond expectations. By taking a proactive, practical and responsive approach to customer service, Summit has set itself apart in each of the markets it serves: Charlotte (NC), Charleston and Hilton Head (SC) and Nashville (TN). The team of approximately 180 trained and skilled landscape professionals holds certifications to offer a full suite of landscaping services including, turf management, agronomics, tree and plant care, landscape design and install, irrigation install and repair, outdoor living (hardscapes), landscape lighting, erosion control, storm water control and inspection, soil stabilization, grading and snow and ice removal.

Conference Call Information

A conference call to discuss the first quarter fiscal 2020 financial results is scheduled for February 6, 2020, at 10 a.m. EST. The U.S. toll free dial-in for the conference call is (877) 273-7124 and the international dial-in is (647) 689-5396. The conference passcode is 8507717. A live audio webcast of the conference call will be available on the Company’s investor website https://investor.brightview.com, where presentation materials will be posted prior to the call.

A telephone replay will be available shortly after the broadcast through February 13, 2020, by dialing (800) 585-8367 from the U.S., and entering conference passcode 8507717. A replay of the audio webcast also will be archived on the Company’s investor website.