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BrightView Reports First Quarter Fiscal 2019 Results, Reaffirms Full Year Fiscal 2019 Guidance

February 7, 2019
(Graphic: Business Wire)

PLYMOUTH MEETING, Pa.--(BUSINESS WIRE)--Feb 7, 2019--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, 2018.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190207005088/en/

(Graphic: Business Wire)

First Quarter Fiscal 2019 Highlights

Total Revenues for the quarter totaled $526.0 million, a 4.6% decline versus the prior year quarter, with 3.5% lower Maintenance Services Segment revenues and 7.5% lower Development Services Segment revenues; Net Loss of $8.8 million, or ($0.09) per share or net loss margin of 1.7%, compared to Net Income of $19.3 million, or $0.25 per share or net income margin of 3.5%, in the prior year quarter; Adjusted EBITDA of $50.1 million, or 24.5% below the prior year quarter, with an Adjusted EBITDA margin of 9.5%; Adjusted Net Income of $10.4 million, or $0.10 per share, compared to Adjusted Net Income of $13.4 million, or $0.17 per share, in the prior year quarter.

“Our financial results reflect the challenging prior-year hurricane comparisons, our strategic Managed Exit initiative and other operating conditions that we highlighted in our guidance on our November 2018 earnings conference call, as well as a slow start to the season for our snow removal services. Since we planned for these seasonal and episodic factors, we are not changing our outlook for full fiscal 2019. Our net new sales, which will benefit the upcoming ‘green’ maintenance season, are the highest they have been in three years; our development project bookings are ahead of last year’s pace and our strong-on-strong acquisition strategy already has added three companies with enough expected revenue impact to reach our full year fiscal 2019 target of $75 million,” said Andrew Masterman, BrightView President and Chief Executive Officer. “As we move through the year we will build on our best-in-class operating foundation by executing against our key growth drivers of maximizing existing customer relationships, adding new customers to our portfolio, and expanding our national footprint.”

Unless indicated otherwise, the information in this release has been adjusted to give effect to a 2.33839-for-one reverse stock split of the Company’s common stock effected on June 8, 2018. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted 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 2019 Results – Total BrightView

For the first quarter fiscal 2019, total revenue decreased 4.6% to $526.0 million due to a decline in the Maintenance Services Segment and Development Services Segment revenue. Total Adjusted EBITDA declined 24.5% driven by decreases in the Maintenance Services Segment, due to hurricane and snow removal comparisons, and the Development Services Segment Adjusted EBITDA, due mostly to comparisons with large project work in the prior year, as discussed further below.

Fiscal 2019 Results – Segments

For the first quarter fiscal 2019, revenue in the Maintenance Services Segment decreased 3.5% to $392.5 million. Landscape Maintenance Services revenue decreased 2.4%. Acquisitions added 6.4% but were partially offset by an 8.9% negative revenue contribution from commercial landscaping. Within this result, was a difficult comparison with the revenue related to Hurricane Irma and Maria clean-up, the final quarterly impact from the prior-year turnover of national accounts, and lower revenue due to Managed Exits as the Company strategically reduced the number of less profitable accounts established in previous years. Snow removal services revenue decreased 10.5% due to lower year-over-year snowfall in key geographies.

Adjusted EBITDA for the Maintenance Services Segment in the quarter decreased 19.6% to $48.7 million, with the Adjusted EBITDA margin decreasing 250 basis points versus the prior year quarter. The decline in segment profitability was mainly a result of higher-margin hurricane clean-up activity in the first quarter of fiscal 2018 and a decline in the contribution from snow removal services due to timing and below average snowfall during the quarter compared to the prior year quarter.

Revenues for the Development Services Segment decreased 7.5% to $134.4 million for the first quarter fiscal 2019. Project revenue derived from Maintenance Services acquisitions contributed to offset a comparison against the prior year period due to timing of work performed on certain large projects.

Adjusted EBITDA for the Development Services Segment decreased 16.8% to $17.0 million in the quarter, negatively affected by the decrease in net revenue described above, coupled with an increase in costs related to timing of work performed.

Net cash provided by operating activities for the quarter ended December 31, 2018 was $6.4 million, compared to $82.5 million for the prior year. Adjusted Free Cash Flow for the quarter ended December 31, 2018 was cash used of $9.1 million, a decrease in cash generation of $84.1 million over the prior year. The decreases are reflective of lower working capital in the quarter primarily driven by timing of payments of accounts payables and other liabilities.

For the quarter ended December 31, 2018, capital expenditures were $17.3 million, compared with $29.8 million last year, driven by the purchase of legacy ValleyCrest facilities for $21.6 million in the prior year period. The Company also generated proceeds from the sale of property and equipment of $1.8 million and $0.7 million in the first quarters of fiscal 2019 and 2018, respectively. Net of the legacy asset purchase and the proceeds from the sale of property and equipment in each year, capital expenditures represented 3.0% and 1.4% of revenue in the first quarters of fiscal 2019 and 2018, respectively.

As of December 31, 2018, the Company’s Total Net Financial Debt was $1.161 billion, an increase of $12.2 million compared to $1.149 billion at the prior fiscal year end. Combined with lower Adjusted EBITDA generation for the quarter, the change in the Company’s net debt led to a Total Net Financial Debt to Adjusted EBITDA ratio of 4.1x as of December 31, 2018.

Recent Developments

Acquisition of Emerald Landscape Company, Inc.

On January 10, BrightView announced that it had acquired Emerald Landscape Company, Inc. (“Emerald”), a preeminent commercial landscaping company located in California’s Bay Area. Terms of the transaction were not disclosed.

Emerald specializes in commercial landscape maintenance, enhancement, tree care, turf management and irrigation services, employing more than 200 highly skilled team members. It operates branches in the key Bay Area markets of Livermore, Hayward, Concord, San Jose, Manteca, and Tracy.

Acquisition of Benchmark Landscapes

At the beginning of February, BrightView acquired Benchmark Landscapes, LLC (“Benchmark”), a leading commercial landscape service company in Central Texas. Terms of the transaction were not disclosed.

Benchmark offers a full suite of commercial landscaping solutions, including grounds management, landscape enhancement and arbor services. With over 200 employees, the company covers a service area from Austin to San Antonio, inclusive of the San Marcos and New Braunfels areas as well as Corpus Christi.

Conference Call Information

A conference call to discuss the first quarter fiscal 2019 financial results is scheduled for February 7, 2019, at 10 a.m. Eastern Standard Time. 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 7383949. 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 14, 2019, by dialing 800-585-8367 from the U.S., and entering conference passcode 7383949. A replay of the audio webcast also will be archived on the Company’s investor website.

About BrightView

BrightView is the largest provider of commercial landscaping services in the United States. Through its team of approximately 20,000 employees, BrightView provides services ranging from landscape maintenance and enhancements to tree care and landscape development for thousands of customers’ properties, including corporate and commercial properties, HOAs, public parks, hotels and resorts, hospitals and other healthcare facilities, educational institutions, restaurants and retail, and golf courses, among others.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our industry, growth strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. You can identify these forward-looking statements by the use of words such as “outlook,” “guidance,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks, uncertainties and factors, including general economic and financial conditions; competitive industry pressures; the failure to retain certain current customers, renew existing customer contracts and obtain new customer contracts; a determination by customers to reduce their outsourcing or use of preferred vendors; the dispersed nature of our operating structure; our ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; the seasonal nature of our landscape maintenance services; our dependence on weather conditions; increases in prices for raw materials and fuel; product shortages and the loss of key suppliers; our ability to accurately estimate costs of a contract; the conditions and periodic fluctuations of real estate markets, including residential and commercial construction; our ability to retain our executive management and other key personnel; our ability to attract and retain trained workers and third-party contractors and re-employ seasonal workers; any failure to properly verify employment eligibility of our employees; subcontractors taking actions that harm our business; our recognition of future impairment charges; laws and governmental regulations, including those relating to employees, wage and hour, immigration, human health and safety and transportation; environmental, health and safety laws and regulations; the impact of any adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations; increase in on-job accidents involving employees; any failure, inadequacy, interruption, security failure or breach of our information technology systems; any failure to protect the security of personal information about our customers, employees and third parties; our ability to adequately protect our intellectual property; occurrence of natural disasters, terrorist attacks or other external events; our ability to generate sufficient cash flow to satisfy our significant debt service obligations; our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements; restrictions imposed by our debt agreements that limit our flexibility in operating our business; increases in interest rates increasing the cost of servicing our substantial indebtedness; and counterparty credit worthiness risk or risk of non-performance with respect to derivative financial instruments. Additional factors that could cause BrightView’s results to differ materially from those described in the forward-looking statements can be found under “Item 1A. Risk Factors” in our Form 10-K for the fiscal year ended September 30, 2018, and our quarterly report on Form 10-Q for the first quarter fiscal 2019, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. Any forward-looking statement made in this press release speaks only as of the date on which it was made. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

To supplement the Company’s financial information presented in accordance with GAAP and aid understanding of the Company’s business performance, the Company uses certain non-GAAP financial measures, namely “Adjusted EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net Income” “Adjusted Earnings per Share” and “Adjusted Free Cash Flow”. We believe Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow assist investors and in comparing our results across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes these non-GAAP financial measures are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management regularly uses these measures as tools in evaluating our operating performance, financial performance and liquidity. Management uses Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow to supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. In addition, we believe that Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income per Share and Adjusted Free Cash Flow are frequently used by investors and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA: We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, as further adjusted to exclude certain non-cash, non-recurring and other adjustment items.

Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted EBITDA, defined above, divided by Net Service Revenues.

Adjusted Net Income: We define Adjusted Net Income as net income (loss) including interest and depreciation, and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items.

Adjusted Earnings per Share: We define Adjusted Earnings per Share as Adjusted Net Income divided by the weighted average number of common shares outstanding for the period.

Adjusted Free Cash Flow: We define Adjusted Free Cash Flow as cash flows from operating activities less capital expenditures, net of proceeds from the sale of property and equipment, further adjusted for the acquisition of certain legacy properties associated with our acquired ValleyCrest business.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings per Share and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) or the ratio of net income (loss) to net revenue as a measure of financial performance, cash flows provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Additionally, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

View source version on businesswire.com:https://www.businesswire.com/news/home/20190207005088/en/

CONTACT: INVESTOR RELATIONS CONTACT:

Daniel Schleiniger, VP of Investor Relations

484.567.7148

Daniel.Schleiniger@BrightView.comMEDIA CONTACT:

Fred Jacobs, VP of Communications & Public Affairs

484.567.7244

Fred.Jacobs@BrightView.com

KEYWORD: UNITED STATES NORTH AMERICA PENNSYLVANIA

INDUSTRY KEYWORD: LANDSCAPE CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE

SOURCE: BrightView Landscapes

Copyright Business Wire 2019.

PUB: 02/07/2019 06:30 AM/DISC: 02/07/2019 06:30 AM

http://www.businesswire.com/news/home/20190207005088/en

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