BrightView Reports Third Quarter Fiscal 2021 Results

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 third quarter ended June 30, 2021.

(Graphic: Business Wire)

“We are very pleased with an exceptional quarter driven by Maintenance Land organic revenue growth of 11.7%, which was the strongest since our 2018 IPO. Our return to positive organic growth is again a testament to the investments made in our expanded sales teams and sales enablement technologies, and underpins our Adjusted EBITDA improvement. Free Cash Flow generation remained strong, funding our acquisition strategy, which continues to be a reliable and sustainable source of revenue growth” said Andrew Masterman, BrightView President and Chief Executive Officer. “Following a strong first half of fiscal 2021, our talented and seasoned teams continued to overcome labor headwinds, job delays and supply chain challenges to deliver even stronger results in the third quarter. Overall, I am pleased as we continue to successfully execute our strategy and gain strength as a company. I could not be prouder of our 20,000 plus team members or more confident about our future and ability to deliver superior results to all stakeholders.”

Third Quarter Fiscal 2021 Highlights

• Total revenue of $673.6 million, a 10.8% increase compared to $608.1 million in the prior year.
• Maintenance revenue of $524.6 million, a 15.0% increase compared to $456.3 million in the prior year;
  • Land revenue of $521.2 million compared to the prior year of $451.2 million underpinned by organic revenue growth of 11.7%.
• Development revenue of $150.3 million, a 1.6% decrease compared to $152.8 million in the prior year.
• Net Income of $25.2 million, or $0.24 per share, compared to Net Loss of $2.4 million, or $(0.02) per share in the prior year; Net Income Margin of 3.7%, an improvement of 410 basis points compared to prior year Net Loss Margin of 0.4%.
• Adjusted EBITDA of $93.6 million, an increase of $2.6 million or 2.9% compared to Adjusted EBITDA of $91.0 million in the prior year; Adjusted EBITDA margin of 13.9%, a decrease of 110 basis points compared to Adjusted EBITDA margin of 15.0% in the prior year.
• Net cash provided by operating activities of $50.0 million and Free Cash Flow generation of $37.3 million.

Nine Months Fiscal 2021 Highlights

• Total revenue of $1,879.9 million, an 8.2% increase compared to $1,737.9 million in the prior year.
• Maintenance revenue of $1,478.4 million, a 14.7% increase compared to $1,288.7 million in the prior year;
  • Land revenue of $1,193.2 million compared to the prior year of $1,125.6 million underpinned by organic revenue growth of 1.5%;
  • Snow revenue of $285.2 million compared to the prior year of $163.1 million.
• Development revenue of $404.7 million, a 10.4% decrease compared to $451.9 million in the prior year.
• Net Income of $19.5 million, or $0.19 per share, and a Net Income Margin of 1.0%, compared to Net Loss of $35.5 million, or ($0.34) per share, and a net loss margin of 2.0%, in the prior year.
• Adjusted EBITDA of $212.8 million, an increase of $31.2 million or 17.2% compared to Adjusted EBITDA of $181.6 million in the prior year; Adjusted EBITDA margin of 11.3%, an increase of 90 basis points compared to Adjusted EBITDA margin of 10.4% in the prior year.
• Net cash provided by operating activities of $133.4 million and Free Cash Flow generation of $96.2 million.

Fiscal 2021 Results – Total BrightView

For the third quarter of fiscal 2021, total revenue increased 10.8% to $673.6 million driven principally by an increase in Maintenance Services revenues of $68.3 million. Net Income was $25.2 million compared to Net Loss of $2.4 million in the prior year period. Total Adjusted EBITDA increased $2.6 million, or 2.9%, to $93.6 million from $91.0 million in the prior year period. Maintenance Services Segment Adjusted EBITDA increased $7.3 million, or 8.8%, to $90.6 million compared to $83.3 in the prior year period. Development Services Segment Adjusted EBITDA decreased $3.1 million to $18.7 million from $21.8 million in the prior year period due principally to a decrease in net service revenues. The Segment Adjusted EBITDA results are discussed further below.

For the nine months ended June 30, 2021, total revenue increased 8.2% to $1,879.9 million driven principally by an increase in Maintenance Services revenues of $189.7 million. Net Income was $19.5 million compared to Net Loss of $35.5 million in the prior year period. Total Adjusted EBITDA increased $31.2 million, or 17.2%, to $212.8 million from $181.6 million in the prior year period. Maintenance Services Segment Adjusted EBITDA increased $40.8 million, or 23.8%, to $212.5 million compared to $171.7 million in the prior year period. Development Services Segment Adjusted EBITDA decreased to $46.6 million from $55.1 million in the prior year period due principally to a decrease in net service revenues. The Segment Adjusted EBITDA results are discussed further below.

Fiscal 2021 Results – Segments

For the third quarter of fiscal 2021, revenue in the Maintenance Services Segment increased by $68.3 million, or 15.0%, from the 2020 period. The increase was primarily driven by a $52.8 million increase in commercial landscape services underpinned by a combination of contract and ancillary services growth, as well as an $18.0 million revenue contribution from acquired businesses.

Adjusted EBITDA for the Maintenance Services Segment for the three months ended June 30, 2021 increased by $7.3 million to $90.6 million from $83.3 million in the 2020 period. The increase in Segment Adjusted EBITDA was principally driven by the increase in Maintenance Services revenues discussed above. Segment Adjusted EBITDA Margin decreased 100 basis points, to 17.3%, in the three months ended June 30, 2021, from 18.3% in the 2020 period, primarily due to higher material costs and increased labor costs inclusive of the Juneteenth company holiday introduced in June 2021.

For the nine months ended June 30, 2021, revenue in the Maintenance Services Segment increased by $189.7 million, or 14.7%, from the 2020 period. Revenues from snow removal services were $285.2 million, an increase of $122.1 million over the 2020 period, and revenues from landscape services were $1,193.2 million, an increase of $67.6 million over the 2020 period. The increase in snow removal services was primarily attributable to the increased frequency of snowfall events and the higher relative snowfall in the nine months ended June 30, 2021 compared to the prior year period. The increase in landscape services revenues was driven by a $53.2 million revenue contribution from acquired businesses and a $16.8 million increase in commercial landscape services underpinned by a combination of contract and ancillary services growth.

Adjusted EBITDA for the Maintenance Services Segment for the nine months ended June 30, 2021 increased $40.8 million, to $212.5 million, compared to $171.7 million in the 2020 period. Segment Adjusted EBITDA Margin increased 110 basis points, to 14.4%, in the nine months ended June 30, 2021, from 13.3% in the 2020 period. The increases in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin were principally driven by the increase in net service revenues described above and a decrease in Selling, general, and administrative expenses due to cost containment actions.

For the third quarter of fiscal 2021, revenue in the Development Services Segment decreased $2.5 million, or 1.6%, compared to the 2020 period. The decrease in Development Services revenues was principally driven by an $11.6 million reduction due to reduced backlog as a result of the COVID-19 pandemic, coupled with a $5.9 million reduction due to the sale of BrightView Tree Company in September 2020, partially offset by a $14.9 million revenue contribution from acquired businesses.

Adjusted EBITDA for the Development Services Segment for the three months ended June 30, 2021 decreased $3.1 million, to $18.7 million, compared to the 2020 period. Segment Adjusted EBITDA Margin decreased 190 basis points, to 12.4% for the quarter from 14.3% in the 2020 period. Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin decreased due to the decrease in net service revenues described above coupled with higher material costs, partially offset by a decrease in Selling, general, and administrative expenses due to cost containment actions.

For the nine months ended June 30, 2021, revenues for the Development Services Segment decreased $47.2 million, or 10.4%, compared to the 2020 period. The decrease in Development Services revenues was principally driven by a $58.2 million reduction due to reduced backlog as a result of the COVID-19 pandemic, partially offset by a $29.6 million revenue contribution from acquired businesses. In addition, the sale of BrightView Tree Company in September 2020 reduced net service revenues by $18.6 million for the nine months ended June 30, 2021.

Adjusted EBITDA for the Development Services Segment for the nine months ended June 30, 2021 decreased $8.5 million, to $46.6 million, compared to the 2020 period. Segment Adjusted EBITDA Margin decreased 70 basis points to 11.5% in the nine months ended June 30, 2021, from 12.2% in the 2020 period. Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin decreased due to the decrease in net service revenues described above, partially offset by a decrease in Selling, general, and administrative expenses due to cost containment actions.

Net cash provided by operating activities for the nine months ended June 30, 2021 decreased $28.5 million, to $133.4 million, from $161.9 million in the 2020 period. This decrease was due to a reduction in the cash provided by accounts receivable, unbilled and deferred revenue, and accounts payable and other operating liabilities, partially offset by an increase in cash provided by other operating assets.

Free Cash Flow decreased $23.6 million to $96.2 million for the nine months ended June 30, 2021 from $119.8 million in the 2020 period. The decrease in Free Cash Flow was due to a decrease in cash provided by operating activities, as described above.

For the nine months ended June 30, 2021, capital expenditures were $44.7 million, compared with $45.9 million in the prior year. The Company also generated proceeds from the sale of property and equipment of $7.5 million and $3.8 million during the nine months ended June 30, 2021 and 2020, respectively. Net of the proceeds from the sale of property and equipment, net capital expenditures represented 2.0% and 2.4% of revenue in the nine months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, the Company’s Total Net Financial Debt was $1,048.1 million, a decrease of $63.5 million compared to $1,111.6 million as of June 30, 2020. The Company’s Total Net Financial Debt to Adjusted EBITDA ratio was 3.5x and 4.1x as of June 30, 2021 and June 30, 2020, respectively.

Recent M&A Activity
In June 2021, BrightView acquired Baytree Landscape, a full-service landscaping company based in the southeast market. Founded in 2014, with six primary locations and a skilled labor force of approximately 370 team members, Baytree is recognized as a leader in the southeast market.

Additionally, in June 2021, BrightView acquired West Bay Landscape, a service leader in the desirable Southwest Florida market. The company, with 125 trained personnel, provides a mix of revenue with enhancement and maintenance services, and strengthens our presence in a desirable market.

Conference Call Information

A conference call to discuss the third quarter fiscal 2021 financial results is scheduled for August 5, 2021, at 10 a.m. EDT. 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 9518947. 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 replay of the call will be available from 1 p.m. EDT on August 5, 2021 to 11:59 p.m. EDT on August 12, 2021. To access the recording, dial (800) 585-8367 or (416) 621-4642 (Conference ID 9518947).