First Quarter Fiscal 2023 Earnings Call - NYSE: BV February 7, 2023
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First Quarter Fiscal 2023 Earnings Call NYSE: BV February 7, 2023
Introductory Information
Forward-Looking Statements litigation, of adverse litigation judgments and settlements resulting from legal proceedings; in the
This presentation contains forward looking statements within the meaning of Section 27A of the impact of potential on-job accidents involving employees; any failure, inadequacy, interruption,
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 security failure or breach of our information technology systems; any failure to comply with data
that involve substantial risks and uncertainties. All statements, other than statements of privacy regulations; our ability to adequately protect our intellectual property; restrictions
historical facts, contained in this presentation, including statements made on slide 17 under the imposed by our debt agreements that limit our flexibility in operating our business; our ability to
heading “Financial Guidance” and other statements related to our expectations regarding our generate sufficient cash flow to satisfy our significant debt; our ability to incur additional debt
industry, strategy, future operations, future liquidity and financial position, future revenues, financing to fund future working capital, capital expenditures, investments or acquisitions, or
projected costs, prospects, plans and objectives of management, are forward-looking other general corporate requirements; our variable rate indebtedness and recent increases in
statements. The words such as “outlook,” “guidance,” “projects,” “continues,” “believes,” interest rates governing our variable rate indebtedness increasing the cost of servicing our
“expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” or the substantial indebtedness; any future sales or other transactions, by us or our affiliates, which
negative version of these words or similar expressions are intended to identify forward-looking could cause the market price for our common stock to decline; the ability of KKR BrightView
statements. By their nature, forward-looking statements: speak only as of the date they are Aggregator L.P., who holds approximately 54% of our shares, to exert significant influence over
made; are not statements of historical fact or guarantees of future performance; and are subject us; ownership of our common stock; occurrence of natural disasters, terrorist attacks or other
to risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or external events; changes in generally accepted accounting principles in the United States; any
quantify. Our expectations, beliefs, and projections are expressed in good faith, and we believe negative impacts from heightened inflation, recession and financial market disruptions; our
there is a reasonable basis for them. However, there can be no assurance that management’s ability to pursue and achieve our environmental, social and corporate governance focus area
expectations, beliefs and projections will result or be achieved, and actual results may vary goals; unexpected delays, difficulties, and expenses encountered or incurred in pursuing our
materially from what is expressed in or indicated by the forward-looking statements. Factors that ESG goals; and costs and requirements imposed as a result of maintaining the requirement of
could cause actual results to differ materially from those projected include, but are not limited to: being a public company. Additional factors that could cause our results to differ materially from
general business economic and financial conditions, including recessionary conditions; the those described in the forward-looking statements can be found under “Item 1A. Risk Factors” in
continued effects of the COVID-19 pandemic; higher operational and supply costs and expenses our Form 10-K for the fiscal year ended September 30, 2022 as such factors may be updated
due to inflation, and our inability to pass higher costs and expenses onto our customers; from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website
competitive industry pressures; the failure to retain current customers, renew existing customer at www.sec.gov. Accordingly, there are or will be important factors that could cause actual
contracts and obtain new customer contracts; the failure to enter into profitable contracts, or outcomes or results to differ materially from those indicated in these statements. These factors
maintaining customer contracts that are unprofitable; a determination by customers to reduce should not be construed as exhaustive and should be read in conjunction with the other
their outsourcing or use of preferred vendors; the dispersed nature of our operating structure; cautionary statements that are included in this presentation and in our filings with the SEC. Any
our ability to implement our business strategies and achieve our growth objectives; the forward-looking statement made in this presentation speaks only as of the date on which it was
possibility that the anticipated benefits from our business acquisitions and dispositions will not made. We undertake no obligation to publicly update or review any forward-looking statement,
be realized; the possibility that costs or difficulties related to the integration of acquired whether as a result of new information, future developments or otherwise, except as required by
operations will be greater than expected and the possibility that integration efforts will disrupt our law.
business and strain management time and resources; the seasonal nature of our landscape
maintenance services; the impact of seasonality on the demands for our services, including the Non-GAAP Financial Measures
reliance on the level, timing and location of snowfall for our snowfall removal services; our Included in this presentation are certain non-GAAP financial measures, such as “Adjusted
dependence on weather conditions and climate change; increases in prices for raw materials, EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net Income”, “Free Cash Flow”, Total Financial
labor and fuel caused by rising inflation; changes in our ability to source adequate supplies and Debt”, “Total Net Financial Debt” and “Total Net Financial Debt to Adjusted EBITDA ratio”,
materials in a timely manner; any failure to accurately estimate the overall risk, requirements, or designed to complement the financial information presented in accordance with U.S. GAAP
costs when we bid on or negotiate contracts that are ultimately awarded to us; the conditions because management believes such measures are useful to investors. These non-GAAP
and periodic fluctuations of real estate markets, including residential and commercial financial measures should be considered only as supplemental to financial measures provided in
construction; our ability to retain our executive management and other key personnel; our ability accordance with GAAP. Please refer to the appendix of this presentation for a reconciliation of
to attract and retain trained workers and third-party contractors and re-employ seasonal the historical non-GAAP financial measures included in this presentation to the most directly
workers; any failure to properly verify employment eligibility of our employees; subcontractors comparable financial measures prepared in accordance with GAAP. Because GAAP financial
taking actions that harm our business; our recognition of future impairment charges; laws and measures on a forward-looking basis are not accessible, and reconciling information is not
governmental regulations, including those relating to employees, wage and hour, immigration, available without unreasonable effort, we have not provided reconciliations for forward-looking
human health and safety and transportation; environmental, health and safety laws and non-GAAP measures. For the same reasons we are unable to address the probable significance
regulations, including regulatory costs, claims and litigation related to the use of chemicals and of the unavailable information, which could have a potentially unpredictable and potentially
pesticides by employees and related third-party claims; the distraction and impact caused by significant impact on its future GAAP financial results.
1Q FY2023 Earnings Presentation | 2
Highlights & Business Update
Andrew Masterman | President & Chief Executive Officer
1Q FY2023 Earnings Presentation | 3
1Q FY2023 Highlights
REVENUE REVENUE
• Strong growth across segments; 5.5% Total Organic
• Maintenance 5.5% organic
• 1.5% Land Organic
• 50.5% Snow Organic: ~6% annual contracts and ~44% volume
• Development 5.9% organic
• Accretive M&A; revenue contribution of $31.3M for Q1
ADJ. EBITDA
• $49M in Adj. EBITDA above high end of guidance
• 20 bp margin expansion
PROACTIVE DEBT MANAGEMENT
• Hedged $1B of debt, fixed rate on 70% of total debt
• Lowered interest expense by ~$10 million on annual basis
1Q FY2023 Earnings Presentation | 4
BrightView’s Snow Markets in Q1 and Q2
Q1FY23 - NOAA Data(1) January 2023(2)
NOAA Snow Snow Avg. Snow
BrightView BrightView Vs. Prior Year
30 Yr. (Inches) (Inches) (Inches)
Market Region
Avg. 1Q’2022 1Q’2023 Jan 2023
Denver 128.6% 4.1 20.8 Rocky Mountain 9.8 6.3%
Chicago 46.7% 1.9 4.3 Mid-Atlantic 0.2 (98.8)%
Mid-West 10.4 31.6%
Boston 48.9% 2.6 3.4
Across our footprint, for the first quarter, Northeast 2.4 (87.0)%
snowfall was at 85% of the 30-year Total 5.2 (61.7)%
average vs. 30% in the prior year
Northeast temperature for February & March
projected to be 30% to 40% higher than
average(3)
Below average snowfall for Q1FY23
January snowfall significantly below average in Northeast
(1) National Oceanic and Atmospheric Administration (NOAA): Source of macro weather data
(2) Source: Weatherworks, data through January 31, 2023
(3) Source: NOAA temperature estimates 1Q FY2023 Earnings Presentation | 5
Strategic Pillars Drive Long-Term Growth
Dedicated, locally-based Strategic technology Accretive and strategic
salesforce to generate investments, digital acquisitions to
new sales services and marketing expand footprint
Investing in 200+ person Driving differentiated value Expanding footprint in
business development team proposition to attract and high-growth geographies
solely focused on securing engage customers and with favorable weather and
new customers expand market share economic characteristics
1Q FY2023 Earnings Presentation | 6
▪ Executed on 35+ accretive
Expanding through acquisitions in the last seven
years, including more than
Strategic Acquisitions 15 acquisitions in the last
two years
2021 ▪ Expanded in high growth
Austin, TX Plymouth, MN Las Vegs, NV St. Paul, MN MSAs, i.e., Boise; Salt Lake
City; and Phoenix
Syracuse, NY Bradenton, FL Atlanta, GA San Jose, CA
▪ In fiscal 2023, added Apex in
Myrtle Beach; Smith’s Tree
2022 Care in Newport News; and
Island Plant Company in
Honolulu, HI
Ringwood, NJ
Detroit, MI Hawaii
Phoenix, AZ
▪ M&A continues to be a solid
Salt Lake City, UT & Boise, ID Boise, ID
Wailuku, HI
contributor to topline growth
2023
+ $700M DEAL
PIPELINE
Myrtle Beach, SC
Strategically Deploying FCF
Pukalani, HI
Newport News, Va
in Select M&A transactions
1Q FY2023 Earnings Presentation | 7
Disciplined Approach to Enhance Operational
Performance and Optimize Costs
Landscape Maintenance Snow Services Development
Pricing offset increases in labor & Expand in self-performance to Shifted timing of pricing
in material costs improve reliability & lower total costs commitments to 10 - 15 days
Managed fuel, neutral to Q2 Invest in equipment to drive Focused on expanding into
FY2023 efficiency higher-margin projects
FY2023 Prudent Overhead Actions
• Limit new hiring, bringing out-sourced operations in-house, and focus +20 BP
on driving operational efficiencies Total Margin
• Reducing T&E expenses, managing marketing costs and reducing
reliance on third-party vendors Expansion
SG&A Ratio Down 100 Basis Points since FY2021
1Q FY2023 Earnings Presentation | 8
ESG Highlights
ENVIRONMENTAL SOCIAL
Deployed ~1,000 battery powered, Conducted BrightView’s first team
zero-emission handheld member engagement survey to
equipment units. help inform our strategy and
Converted ~400 vehicles to hybrid strengthen team member
or electric experience
Installed sophisticated irrigation Continued to diversify our
solutions in hundreds of workforce by increasing the
properties across the U.S, percentage of women and
including large HOAs, Hispanic/Latino team members
universities, hospitals and in manager level roles
corporate campuses
Partnered with Arbor Day Sustained total recordable injury
Foundation to plant nearly rate below the landscaping
300,000 trees services industry average
1Q FY2023 Earnings Presentation | 9
Note: ESG report published on Feb 1, 2023
Financial Review & Outlook
Brett Urban | Chief Financial Officer
1Q FY2023 Earnings Presentation | 101Q FY2023
Revenue
(Numbers $M) 1Q23 1Q22 Commentary
• 10.8% Increase
Total Revenue $655.9 $591.8 • 5.5% Total Organic Growth and M&A contribution of $31.3M
• 10.3% Increase
Total Maintenance Services $483.2 $438.2
• 5.5% Organic Growth and M&A contribution of $20.7M
Total Land $421.4 $402.2 • 4.8% Increase; 1.5% organic growth
Total Snow $61.8 $36.0 • 71.7% Increase; 50.5% organic growth
• 12.7% Increase
Development Services $174.4 $154.7 • 5.9% Organic Growth and M&A contribution of $10.6M
1Q FY2023 Earnings Presentation | 111Q FY2023 Adjusted EBITDA
(Numbers $M) 1Q23 1Q22 Commentary
▪ 14.1% Increase
Total Adjusted
$48.6 $42.6 • 7.4% Adjusted EBITDA margin
EBITDA • 20 bp improvement
▪ 11.5% Increase
Maintenance
$50.5 $45.3 • 10.5% Adjusted EBITDA margin
Services • 20 bp improvement
▪ 13.8% Increase
Development
$16.5 $14.5 • 9.5% Adjusted EBITDA margin
Services • 10 bp improvement
Corporate
($18.4) ($17.2) ▪ 2.8% of revenue, 10 bp improvement
Expenses
Profitability Significantly Above High-End of Guidance Range
1Q FY2023 Earnings Presentation | 12Disciplined Expense Management
Total Revenue
$ in mm
✓ Consistent topline growth
$2,839 ✓ Disciplined and prudent
$2,775
management of overhead costs,
$2,554
$2,405 $2,346
while investing to drive
momentum
✓ SG&A as percentage of
FY19 FY20 FY21 FY22 Q1FY23
TTM
revenue improving
SG&A / Total Revenue • 100 bp better since FY21
%
• Flat with FY19, despite
22.5% inflationary environment
19.9%
19.3%
✓ Levered corporate costs
18.8% 18.9%
✓ Supporting long-term EBITDA
margin expansion
FY19 FY20 FY21 FY22 Q1FY23
TTM
Solid topline growth, investing in our business and maintaining SG&A flat
1Q FY2023 Earnings Presentation | 13Proactive Debt Maturity and Rate Management
Optimizing Debt Structure Term Loan Rate(1) Term Loan Rate(2)
Current SOFR Blended Hedge
• Capped interest rate on $1B of Term Loan (TL) On $1B On $1B
o 50% swap at 3.46% SOFR and 50% collar at 4.35%
to 2.65% SOFR
• Collar floor of 2.65%, upside if rates decrease
8% 7%
• Expect cash interest expense of:
o $27 million for Q2 Interest expense: savings of $7 million
o ~$100 million for FY23 in FY23 and $10 million annualized
Debt Maturity Debt Structure
$1,200
No significant
maturity until 2029
$300
2023 2024 2025 2026 2027 2028 2029
Term Loan Revolver
Fixed Floating
(1) Term loan rate is based on current term SOFR plus a spread of 325 basis points
(2) Term loan rate is based on $500M swap at 3.46% plus a spread of 325 basis points and $500M collar at 4.35% plus a spread of 325 basis points 14Net CapEx, Net Debt and Cash Flow
1 2 3
Net Capital Net Debt Free Cash Flow
Expenditures
$1,454.1
$27.5 $1,374.9
$25.9
1 ($8.7) ($21.7)
($49.9)
($55.5)
1Q'22 1Q'23 4Q'22 1Q'23 1Q'22 1Q'23
Cash Interest Expense
Net CapEx / Total Revenue Net Debt / TTM Adjusted EBITDA Free Cash Flow
Disciplined capex management 4.8x at 4Q’22 Excluding expected interest headwind,
free cash flow improved by $7 million
Expecting 3.0% to 3.25% for FY23 4.9x at 1Q’23
year over year
Disciplined Management of Capital Expenditures
1 Net capital expenditures includes proceeds from sale of property & equipment
2 Net Debt includes total long-term debt, net of original issue discount, and capital lease obligations net of cash and equivalents
3 Defined as borrowing availability plus cash and equivalents
See the “Non-GAAP to GAAP Reconciliation” in the Appendix of this presentation for a reconciliation to the most directly
comparable GAAP measure
1Q FY2023 Earnings Presentation | 15PROACTIVE MANAGEMENT OF FREE CASH FLOW
THEN(1) NOW(1)
Cash Improvement Drivers Cash Improvement Drivers
Enhanced EBITDA Performance Enhanced EBITDA Performance
CARES Act Net Benefit of $20 Million CARES Act Net Benefit of $20 Million
Capital expenditures at 3% to 3.25%
Capital expenditures at 3.5%
+$10 to $15 Million benefit
Cash Interest expense at $100 million
Cash interest expense at $107 Million
+$7 Million in-year benefit
~$20M Additional Expected Benefit to FY2023 Free Cash Flow
(1) Then is as of November 17, 2022, and Now is as of February 7, 2023 1Q FY2023 Earnings Presentation | 162Q Fiscal 2023 Financial Guidance1
Total Revenue Adjusted EBITDA
$610M to $650M $33M to $43M
• Land Organic Growth: 2% to 3% • Maintenance: pricing to offset labor &
material costs
• Development Organic: ~(8)%; due to
timing and mix of projects. Expect • Development: margins improve by 20 to 40
significant rebound in 2HFY23 basis points
• Snow: low end assumes $100 million of • Fuel: neutral to Total Adj. EBITDA
snow revenue and high end assumes $140
million of snow revenue vs. $208 million in • Snow: assumes significantly below average
the prior year snowfall in Northeast and Mid-Atlantic
1Our financial guidance, which was updated on 2/7/23, contains forward-looking statements
and is subject to risks and uncertainties.
See “Introductory Information”.
1Q FY2023 Earnings Presentation | 17BrightView Business Model ▪ Expect significant
improvement in cash relative
to FY22
▪ Continue to invest in long-
term business growth
Recurring
Revenue ▪ Prioritize M&A to drive
growth and improve leverage
▪ Focus on enhancing
Invest in shareholder value
Profitable
M&A and
Incremental
Improve
Leverage Growth
Strong
Cash Flow
1Q FY2023 Earnings Presentation | 18Closing Remarks
Andrew Masterman | President & Chief Executive Officer
1Q FY2023 Earnings Presentation | 19Long-Term Profitable Growth
➢ Operate in a resilient and durable industry;
withstood various economic cycles
➢ Leader in a fragmented industry with multiple
growth opportunities; organic and M&A
➢ Differentiated value proposition; technology,
sustainability and network of expertise
➢ Serve marquee customers across a diverse
array of end-markets
➢ Well positioned for environmental trends;
carbon reduction and water conservation
1Q FY2023 Earnings Presentation | 201Q FY2023 Earnings Call
QUESTIONS &
ANSWERS
1Q FY2023 Earnings Presentation | 21Appendix
Non-GAAP to GAAP Reconciliation
Three Months Ended
December 31,
(in millions)* 2022 2021
Adjusted EBITDA
Net (loss) $ (18.9) $ (12.8)
Plus:
Interest expense, net 23.2 9.7
Income tax (benefit) (5.5) (4.6)
Depreciation expense 27.1 21.4
Amortization expense 11.9 13.4
Business transformation and integration costs (a) 4.7 5.9
Equity-based compensation (b) 5.7 4.8
COVID-19 related expenses (c) 0.4 4.8
Debt extinguishment (e) — —
Adjusted EBITDA $ 48.6 $ 42.6
Adjusted Net (Loss) Income
Net (loss) $ (18.9) $ (12.8)
Plus:
Amortization expense 11.9 13.4
Business transformation and integration costs (a) 4.7 5.9
Equity-based compensation (b) 5.7 4.8
COVID-19 related expenses (c) 0.4 4.8
Income tax adjustment (d) (5.0) (7.9)
Adjusted Net (Loss) Income $ (1.2) $ 8.2
Free Cash Flow
Cash flows (used in) operating activities $ (29.6) $ (22.4)
Minus:
Capital expenditures 27.2 28.6
Plus:
Proceeds from sale of property and equipment 1.4 1.1
Free Cash Flow $ (55.4) $ (49.9)
*Amounts may not total due to rounding
1Q FY2023 Earnings Presentation | 23Non-GAAP to GAAP Reconciliation (cont.)
(a) Business transformation and integration costs consist of (i) severance and related costs; (ii) business integration costs and (iii) information technology
infrastructure, transformation costs, and other.
Three Months Ended
December 31,
(in millions)* 2022 2021
Severance and related costs $ 0.1 $ 0.3
Business integration (e) 2.7 4.0
IT infrastructure, transformation, and other (f) 1.9 1.6
Business transformation and integration costs $ 4.7 $ 5.9
(b) Represents equity-based compensation expense and related taxes recognized for equity incentive plans outstanding.
(c) Represents expenses related to the Company’s response to the COVID-19 pandemic, principally temporary and incremental salary and related expenses,
personal protective equipment and cleaning and supply purchases, and other.
(d) Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a
reduction of income tax (benefit). The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the
jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items
include changes in laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances.
Three Months Ended
December 31,
(in millions)* 2022 2021
Tax impact of pre-tax income adjustments $ 6.0 $ 7.9
Discrete tax items (1.0) —
Income tax adjustment $ 5.0 $ 7.9
(e) Represents isolated expenses specifically related to the integration of acquired companies such as one-time employee retention costs, employee onboarding
and training costs, and fleet and uniform rebranding costs. The Company excludes Business integration costs from the measures disclosed above since such
expenses vary in amount due to the number of acquisitions and size of acquired companies as well as factors specific to each acquisition, and as a result lack
predictability as to occurrence and/or timing, and create a lack of comparability between periods.
(f) (Represents expenses related to distinct initiatives, typically significant enterprise-wide changes. Such expenses are excluded from the measures disclosed
above since such expenses vary in amount based on occurrence as well as factors specific to each of the activities, are outside of the normal operations of the
business, and create a lack of comparability between periods.
(*) Amounts may not total due to rounding.
1Q FY2023 Earnings Presentation | 24Non-GAAP to GAAP Reconciliation (cont.)
Total Financial Debt and Total Net Financial Debt
December 31, September 30, December 31,
(in millions)* 2022 2022 2021
Long-term debt, net $ 1,409.5 $ 1,330.7 $ 1,204.0
Plus:
Current portion of long-term debt 12.0 12.0 10.4
Financing costs, net 10.2 10.6 10.2
Present value of net minimum payment - finance lease obligations (i) 44.8 41.7 24.0
Total Financial Debt 1,476.5 1,395.0 1,248.6
Less: Cash and cash equivalents (22.4) (20.1) (132.8)
Total Net Financial Debt $ 1,454.1 $ 1,374.9 $ 1,115.8
Total Net Financial Debt to Adjusted EBITDA ratio 4.9x 4.8x 3.8x
(i) Balance is presented within Accrued expenses and other current liabilities and Other liabilities in the Consolidated Balance Sheet.
(*) Amounts may not total due to rounding.
1Q FY2023 Earnings Presentation | 25THANK YOU
INVESTOR RELATIONS CONTACT: MEDIA CONTACT:
Faten Freiha David Freireich
VP of Investor Relations VP of Communications & Public Affairs
484.567.7148 484.567.7244
Faten.Freiha@BrightView.com David.Freireich@BrightView.com investor.brightview.com
1Q FY2023 Earnings Presentation | 26You can also read
