BV - Earnings call transcript Q2 2021 | BrightView Holdings, Inc.

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Operator

Good day and thank you for standing by. Welcome to the BrightView Fiscal Second Quarter earnings call. [Operator Instructions] I would now like to hand the conference over to your speaker today, John Shave, Vice President of Investor Relations. Thank you. Please go ahead, sir.

John Shave

good and Tabitha, you, morning. Thank

a presentation I'd Before company's and made Q&A. materially company's some of future and and today financial from today's in operating financial remind and SEC on will non-GAAP the Reconciliations that could those certain risks projected. to for discussion to Comments to the the we statements apply information as Disclaimers results forward-looking comments measures. financial our differ in include the non-GAAP questions today's impact measures filings begin, GAAP the financial of also to press made listeners responses more results comparable uncertainties prepared both forward-looking on refer release. measures like that today, and may are condition. remarks slides, Please reflected provided actual as to including detail are well

and our in which of model, maintenance delivers of tenure with ranging of integrated partner services is leadership Together BrightView We provider of network. development. operation field qualified branches service We the tree than network landscaping commercial companies, largest with care context, with approximately landscape more and service our billion, from development commercial at and level services an years. XX $X XX revenues has services provide landscaping next average landscape annual and to XXX an combining a been than by and times enhancements legacy years, XX operate national maintenance local through the largest For for in has team our our competitor. States, United in leading BrightView the more excess

diverse provider at significant competitive as underpins end-to-end source customer and which national, advantage. we branch position regional a our to model a represents levels, local Our base believe single the delivery a

on Andrew maintenance earth. creates inadequate be We financial landscapes our reputational turn now the the nondiscretionary. essential I to and BrightView also our BrightView's landscape risks associated Masterman. understand to customers consider Executive best call and over Officer, and believe with the will services Chief

John Feenan

good excellent and very our very Andrew, quarter a The the of coupled business, am with snow you, to in investments quarter, contract XXXX. of delivered technology improved stability driving and results land fiscal solid on and morning our I results. with second all everyone. underscore from our in efficiencies maintenance gained with Thank pleased we meaningful drove collectively Combined productivity ongoing in focus management of cost the our our and business. strength been have margins

increased combined year Slide $XXX.X $XX.X our technology fiscal to to Investments headwinds, ended continued are company strong to Turning and the versus manager the versus million revenue support revenues with ancillary snow teams outstanding organic the and Despite for million. demand the account second increased cash impressive $XXX.X prior XX, to contract million. March businesses, growth year an for XX.X% in and from quarter. customer Maintenance prior months in enhancing quarter XXXX XX.X% XX relationships generation. resulted growth, both acquired sales driving three

million $X.X months a $XXX.X Tree declined divestiture. reduction the Company XX, revenue three of the revenues XX.X%, March ended development million For from excluding BrightView

half softness and our by bid we in development and versus stability pronounced second backlog, are pipeline to While fiscal COVID related last of also anticipate XXXX. year, expected second be calendar, we encouraged the the during increased bidding quarter more we

SG&A from in $XX.X an million $XX.X total year. in $XX.X expansion resulted basis XX, EBITDA or cost increase increase Turning $XX.X the $XX.X adjusted a margin XX.X% of XX.X%. was adjusted to or for EBITDA the prior XX.X% XXX an efforts million In and represented strong point maintenance, million the increase initiatives EBITDA million of and second million, quarter year. prior continued to containment Productivity of the details on Slide a versus

of initiatives, margin containment an labor XX.X%. in cost to EBITDA In our solid XXX improvement In result strong EBITDA impressive The and lower decreased to XX% XXXX. which decline to revenue, was $X.X point The million initiatives in Company. QX higher $XX.X the leveraging to was approximately of fiscal by margin basis management snowfall, was BrightView $XX.X million driven led to of development, expansion. sale technology compared addition adjusted attributable million to Tree the

able in Corporate basis development quarter quarter through were However, for efforts, the $XX.X the point the expenses modest margin XX of fiscal in to representing decrease a improvement compared cost revenue X.X% loss, XX-basis against point containment same in strong the revenue, a fiscal was business QX. last year. to resulted which EBITDA second million, X.X% mitigate to

snapshot let decreased Now X.X% million revenue on a maintenance, increased In $XXX.X Slide for to increase million, XX.X% revenues billion. $XXX.X the $X.XX half results revenues XX% first our Total half company me of versus development, a provide you first $XXX.X were XXXX. with million. In XX. or to

year. last compared EBITDA million the As EBITDA compared prior increased XX.X% fiscal increased related in the for to to maintenance pronounced the softness the more year. $XXX.X from of half $XX.X Total expected, prior XX.X% $XXX.X in COVID million to backlog Adjusted first year. to QX year in adjusted $XX.X versus million was million

incentive us contribution, of the build by Our and fiscal addition welcoming, a initiatives snow Diversity, growth. cost compared productivity growth, performance expense minimal offset the helps inclusion increased margin for expected of and reinitiating decreased to and QX half led prior compression. as engaged equity This revenue, EBITDA X.X% of Corporate favorable results, an compensation environment months were our XXXX, for headwinds we in that inclusive $X.X was In contract shortfall by XX-basis and to Juneteenth book improvement containment driven holiday. EBITDA of XXX(k) the a drove the result point weather six Adjusted initiatives a the million. expenses modest second workforce. expect improved year-over-year year. business of continued development segment's fiscal our matching

who had emancipation been As those added as enslaved Juneteenth of to part States. of our United initiatives, holiday celebrate in company the we a the

$X will second these QX. The be approximately QX and over half impact of million items

move expect expenditures of from revenue down In now expenditures fiscal and half first capital a million expenditures in acquisitions to the $XX.X balance self-funded approximately the of we with Expressed to be sheet the our net million $XX.X of guidance. and in Slide XXXX XXXX, of first totaled first of for XX. versus capital the half fiscal revenue, we X% fiscal first were capital XXXX. fiscal XXXX, on in allocation X% $XX.X long-term million first fiscal Net percentage half, the approximately of XXXX. $XX.X in as half line our million on Let's capital revenue, of half

billion fiscal $X.XX billion $X.XX end at of XXXX QX QX Our net of debt end the decreased versus the to fiscal XXXX. at

in ratio the guidance, was leverage is end fiscal to year Our fiscal this with quarter coupled midpoint X.X best metric. have second solid fiscal the initiatives of we X.X improve historical a key XXXX ongoing, times are for versus This year Based of quarter. further that XXXX prior we BrightView. on trajectory and the full at of a our times on

XX. lower us update are decent million had results, Our end of gives QX financing This of and continued net the be capital of our availability flow solid million our performance. of of working $XXX.X under approximately $XXX.X free performance XX, the An expense our million on second quarter XXXX. as ample $XXX.X under EBITDA was and season. million. to further performance. during XXXX, our year-to-date on liquidity XXXX, cash hand. pleased despite March to revolver, solid $XX.X receivables agreement, we we This March in $XXX.X of was fiscal approximately This Slide receivable as At Overall, our by compares interest cash of higher our driven is XX, implement expenditures, to approximately availability timing Total million on capital liquidity with strategy. accounts flexibility snow of

We let into back are the confident guidance full to carry Andrew. me call the to With plan our fiscal over we in turn that, XXXX. and momentum year

Andrew Masterman

you, Thank John.

the Turning Slide consistently fundamentals summary, growth. our signs and and all is our we here see and The know pandemic that key delivered can strong are our to fiscal were remain performance takeaways. so industry In we we most that exciting verticals market is much of financial The of we And are now we the second deliver. opportunity business beginning what more The potential. recover. exceptional. the impact operating quarter in results XX, seeing is to

Our investment in growth. is our sustainable driving organic sales team

and organic growth snow fiscal QX highest ever new realized sales the were BrightView. net Our in for

will technology. We this are continue confident trend

continue We enhance and remain technology productivity, to client to focused profitability engagement. on deploying

adoption across segments both ETC We expanding customer are HOA direct implemented and our teams. have communication management Connect, with facilitating of fully labor tools our

grow to of to invest initiatives marketing, in usage with tools. our focus continue property enhancement. tool organization our of expanded the technological continued sales our assessment in and teams. quality Relationship new software and to and Management effectiveness Customer supporting retention addition these in approach a and we on success enhancements, site continue verticals markets omnichannel Sales Salesforce Our expand and the and marketing expanded sales of sales more support use the effective and Digital

while in delivery. drive are leadership streamlining and long-term and retention, will and and M&A. further structure service sales marketing result a strategies for our improved our and sales formula field-based Our success in investments sales stronger operations new

Additionally, a growth. the source pipeline, of attractive revenue and, reliable will be our sustainable growth continue results and continue our acquisition to to benefit an strategy acquisitions with of

second the under our second that the we for to ability marketplace believe positioned was performance a lines low us in and shown have to and in historic the low Combined ratio end our BrightView. cash-generative our be Our manner beyond and fiscal to multiple service the to efficient the well with business are we is At operate drive cash. horticultural allowing disciplined we quarter, and of excellence one leverage capital banner, knowledge repeatable. and consolidate solid intensive, half

We taking challenging are clients most fiscal on we their families, sustained in develop time. I'd partners each other employees, In has on during and importantly, and with for care taking to metric and thank of a and A of beauty dedication the our our improve further XXXX. pride closing their and this and our resiliency a dedicated trajectory customers how in we organization. like to and maintain properties engage design, our clients focus

continue our call We'll for our to Thank now people deliver open morning. questions. your culture this the will the lies We ahead. focus attention you your this and on for in future that confidence

Operator

Goldman with question Tong of Sachs. first from line your And Instructions] George [Operator the is

George Tong

ancillary especially Good question embedding quarter around trended your prior of that type relative forward-looking on Hi, course over ancillary is of the how to My Thanks. the morning. Can you and revenue what you're performance. elaborate guidance? growth first the quarter, into

Andrew Masterman

– vis-à-vis the profile amount snow across last in of Yes, total, the at that the tough ancillary quarter, look you actually, if when the down look ancillary quarter, look actually was the entire that was of was had ancillary what we you a whereas February an country. But amount at the saw about if or I same you the tough progression think because several George, during quarters, contract we down. improving month, ancillary

over an momentum the ancillary year-over-year So QX continue last several growth and profile as QX both we quarters, that expecting improving into we go in sustain quarters. believe which are and to will

George Tong

then quarters. a a expect Can plans hiring you sales initiatives? you it. force the into much sales as are, involve? would drive Got organic growth sales mentioned driver growth of force in about force to key of your perhaps plans investments what there, organic And the lift And your what the to plans talk how That's bit helpful. coming growth a little acceleration you being the from productivity

Andrew Masterman

to in salesforce. was primarily that deliver, Yes. had the XXXX able in In growth initial QX. kind first That in delivered of on QX, from investment we what we've in based we XX% which snow results were organic

really initiatives them allowed productivity on deals. an snow That opportunity of pipeline integrated elements pipeline manage that cascaded CRM tightly actually of Some we that omnichannel expanded opportunity from to that have the that land. digital that marketing and development has into performance, have the the really overall new helped

And so we continue hiring. be to

organic plus and not those several several growth our plan X% utilizing long-term to to tools. expecting continue but the the hire thus, the growth next to to next underpin QX, plus months while organic course Our only in that just And X% X% continue to happen expect X% the our to over QX we've given growth over that growth in guidance sustainable quarters. be will guidance, we're is of and current salesforce over

Operator

next Baird. And question with Wittmann Andy the of your line from is

Andy Wittmann

too. earnings about, press season. or it's Great, place Thank morning And popular about thought Andrew, in service know this talked lot as of to calls you about the get market my season been for guys And what trends. managing questions. Good of seeing everybody. a I are out guess, you're seeing I economy people? where we you're there labor you out in earnings talked you wage I keep and labor and this, to and there, the terms you how a that, in you're taking I I anything, a result as of of ability for into lot in sorry, wanted There's here? heck What talk labor of your thought through labor if have rates busy a it the a

Andrew Masterman

we're Yes. the Great of question, May, program. the across And and our into been the of country the the employees into employees addition, to March are seeing April, HX-B we not in utilizing season Andy. the to of right? we as board big business. we And thousands on green bring get business. have And immune thousands bring able we labor. This is on what hiring period, is

of the business. the year. we people haven't this have build – it to that said, an some that. And that. always continuing It field difficult has more probably upward John we has We're issue that we to to So have of the little year, every a a had been have wage address a is to us than might into others, being happened labor doesn't I'll that on would issue. we able hope. have constant combination I succeed but able maybe What able onboard be say to is pressure. to levels it's do mean out allowed to to But it's that continue that in up

John Feenan

Yes, good is morning, John. Andy, this

scale of over mitigating upward another that, so We're we're divide of been that certainly You it's yes, know at things nature very more years. a workforce, size to of so lot X% surcharges, inflation with have last right level. we We've of How or different three pricing, that. that but our of pursuing And you the very the the now, aggressively with to pressure still percent seen about in wage and top X% to by branch we're To Andrew's that workforce. circa flexible the clear four customers. country, we're if being we've branches, parts number on very our openings is on seeing that. manageable XXX-odd of our point,

branch, to So we're people at at looking now we be may I a said three for looking for people five historically to five eight a branch.

tightening, as aggressive but proactive possible. definitely and So as still manageable, we're being and

Andy Wittmann

get the for that, John. really just call. context follow-up I little That's would last the Thank given bit done maybe just good on little my more you since here thought context. that question a be M&A guidance, a you've trying more to bit

year the I of worth in, now said, you've you think closed on script, put million that $XXX you've this revenue. annualized Andrew, on

have revenue much that how phases comparable in? context so basis much is guidance you get we inside Just on of how can this that a all so that guidance can we the on inorganic to you've comment how this guidance the given, year revenue, of it

Andrew Masterman

the Andy, question? year, that's full For your

Andy Wittmann

yes, of fiscal how XXXX, now? is how revenue year Yes. revenue, much guidance much for in the inorganic inorganic that I guess,

Andrew Masterman

the we've closed you our several overall, If that period we it just acquisition beginning at last look really, Birch since January announced, only of call because XXXX. we announced on

going going If and to realizing out you And believe about is be do XX%, in about so forecast our now, referenced be for is million. there total $XXX two-third at to we're or million so development. that one-third going the look this we $XXX or year, right to we maintenance be

million. that to had also also given annualized the is only we tail coming XXXX, reflect that from total we is of expect that about business level, amount the over not $XXX So the that's

Operator

from of is Your Blair. line Tim with question William Mulrooney next the

Tim Mulrooney

Good morning John. morning Good Andrew,

and the that's cost strong you which your inputs than in recently inflation really So think might margins? talk how X%, you one year, space pricing of if to distributors and up in this reported equipment your that large if results, large the expecting is on to I'm wondering about affect normal. business, they're get could expectations accelerating higher X%

Andrew Masterman

to we Well, talk short most we material, business, have are when cost of right? So in actually about pretty window the material priced inputs landscaping Tim, when a you the in services. that we with it are from two services of ancillary goes those into, ancillary bid week six an anywhere most And really buy, usually and material those window. priced are to acquire

we're that the whatever seeing, current in pricing tends cost that that the in So give current we be to period. reflected that

pass base. into any that to through our able inflationary comes pricing, we're So price to aspects basically customer when it via material

Tim Mulrooney

Okay. are can pricing What in pre-pandemic? how that a pricing of to how And year you'd kind about to compares year, Andrew? of last you you compares normal get to that expecting kind year? talk get this And

Andrew Masterman

last kind it, of okay? as mean, XXXX, think to actually upward I basically And seen we pricing. were, and or some was I it we we're year, to negative about at comes in slight year, top at on scope pressure what talked have happening when the when pressure seeing look John when back was we've This and of overall more costs on X Yes. we slightly we're mentioned, pricing a I'd upward line say. normalized to some approach of kind labor thus saw

John Feenan

ancillary, get and much have Yes. say it's historic a it's for was that we've slightly But to project-based. it's He's when little flat pretty I'll we those down. but I becomes contract year And have get the think shorter we wouldn't are, to back Andrew's confident And the us visible, we Andrew's window. you But piece, X% best price easier, there. the get we're right? feel can I of key point, levels, we working On more And is a it hard to to price. comment. spot on. somewhere add to bit net at between been Tim, Last able extremely X% to historically, to

And so much based what's there have your with and getting current going on in in the more you inputs on pricing discretion labor.

of we takeaway. the I a flexibility is guess, So lot there, have

Operator

from of question is line with next the Jefferies. Your Hamzah Mazari

Hamzah Mazari

My how just ancillary mention incremental trajectory maintenance at around morning. sitting XX.X%. the adjusted talk question million think And and is forward? that puts at they're maybe did about Could as they I the EBITDA the all comes – guess Good of the half. you we maintenance second $X you also business were going margins. takes, margin side of you about back? When on in costs look should

Andrew Masterman

Hamzah, I'll things. a John few will start, have I'm sure

comp. I this back talked calls, we've the would back as that ancillary, things we right. said in right, $X would two ancillary quarters. back, some we as that, in. be John of won't to the And mean, strong over is think containments on would You're the during have drop-through believe reality about prior that through start million thus, be roughly that regular some approach a had incremental I coming pandemic non-pandemic we that as And will come relative as in pure a cost comes of typically comes

our levels we saw you'll what to total into I to our margin look well expect in to is as think I improvement think relative our at see mean continue the And performance XXXX. in get think higher to in kind I end I margin see, you of the XXXX. continued pre-pandemic, and to toward what back going improve So we're I'd as we're going of performance we XXXX. be guidance, that direction them

Hamzah Mazari

you're seem end but white range. for bigger on I the And markets, you would the you. question, there on or which color. follow-up great. higher verticals corporates spaces Thank of that end you somewhere Thank thoughts any verticals guys of my from are like are underpenetrated XX%, you for perspective at end that think there commercial, other XX%, that HOAs in your sort as know look you Are it. just maintenance be be you? could compete market an Got

Andrew Masterman

Yes.

yet general, you biggest at has the industry, service I at in the the They food education. look outsourced think in move look landscaping. penetrated least to the the marketplace, education Because and suppliers. when Hamzah, probably you or books, outsourced secondary haven't books made overall and frankly, for actually if is vertical opportunity

as data, mostly the outsourced indication been we generated internal still by self-perform landscaping the few XX% data of says crews. Some done has by and as

while vertical, a better believe in us opportunity So provide, we to in and performance and experience that is a better for frankly, actually health of advantages achieving new converting segment. well college some that duty there property, and as cost wins real that every into seeing their secondary new see schools We're we And results month. are of and for contracts. service postsecondary our brand as in-house in landscaping good

very growth something decision I in so opportunity particular believe, because that a good is light there sell do it's for made, vertical. And that's not it's a although long-term

Operator

next is with Labick And question from the of your Securities. line Bob CJS

Bob Labick

great on results outlook. and Congratulations morning. Good

Andrew Masterman

Thanks Bob.

Bob Labick

been to rollout start, to you update feedback can of getting and the product? with that wanted give an results on then Connect us exciting I date the HOA and you've

Andrew Masterman

quarter, absolutely. HOA seen Yes, think that we're properties Connect, dozens the summer. go within added We've we as actually we've we of into Connect adoption. continued using and accelerate last HOA the to going

development that and and to sure version in what done, version we IT listen then Connect able In those and internal what as we've we do, resource best-in-class fact, to HOA can we kind have believe And of wants of ways taken that XXXX own properties. we've customer XXXX. can be our continue to builder enhance We product to is and the we customization X.X, customers we're can a momentum a real and and that testament go use. that X.X we then how panel our of going that an make created to advisory to is use the be to is engage into experience customers build positive with customize able top a technology about deploy Bob, to our really this really some what

Bob Labick

months? next typically, of this But and kick again great. Or seasonality fiscal done in Okay. acquisitions be, my you you about pipeline, mentioned now. there in you year. acquisitions follow-up half Could there's may the on back six XXXX? spoke kind to do talk the I and the be are M&A over would And your then guess by in sounds think That I thoughts more they about you of

Andrew Masterman

have where be Sure. lighter pattern in has Yes. of summer. interesting, that yes deals our we are it's – the a we Acquisitions something acquisition tended closing to

Although, good the was really tend May. two even to years expect under of see to that we the of gives on for several off largest delivering to of acquisition letters $XXX annual communicate May deliver We've million now. have And revenue, one It middle $XX in intent current or see very closed this through. this XXXX. gave up fiscal We're able was but our are, that million on deals usually strong more I is we kind says to and I up summer. some and we Groundskeeper, ago, see past nice fiscal year. wraparound and That We obviously going on confidence would close QX, coming the That to pipeline the the being did do to have some said, we're to deals built fuel the be next quite guidance, help said, of is we those less we growth deals, we progress deals $XX this we of before couple but year that probably we we're in the we much remains in were me of examining, those And which our The being we strong. though targets we'll say $XX year, see overall being continue optimistic be that as lifting we plus. ever like that unusual, really a million tail not right close QX able pipeline we end quite to some the the impact into out of year. that think and in happening.

Operator

the question from next with your And Judah is Sokel line of JPMorgan.

Judah Sokel

morning. Hi, Good

of expecting First get quick and more million off the to and you have of $XXX $XXX number you then take question is $XX contribution a year. one, net million like sale really that a to divestiture net gross the $XXX already in a you million of loss the the to Or $XX that just off Is BTC? to million? the from then and number, from the you're million M&A expected clarify is

Andrew Masterman

a it's a number. Judah. Yes, is – good question, that gross It's

So one-third, on million million, million use when to take if number. and you about about you from set tree and that $XX broad million so then just there's past I'll from about out development $XX numbers, coming took, the you to $XXX $XX need

Judah Sokel

Okay.

it's like So million net million? basis, a more to on $XX $XX

Andrew Masterman

That's correct.

Judah Sokel

Got that over the us the course there you in seeing you some backlog increase you're exactly it. that gives Thanks of for XQ? expecting my was around just the backlog to And things the mean that what year. fact the the expected what question I caused see is XQ over then development. that stabilization Can just in confidence and remind guys some about in softness other you're softness talked And you the clarification. are more improving.

that of you. about bit color a what's little end on – Thank talk going of Just market. in

Andrew Masterman

saw saw in quarters QX, activity activity, when it softness architectural our what and just fiscal peek occurring Absolutely. in year fourth as And overall QX that down. we we – through projects construction started those building we saw we seeing and knew out the development on those we third last contracting thus, And and saw forecast were contracts what about slow coming, be. it new overall going there, QX we to and

were those business. out, seeing we're then We're infrastructure our happening any around before kind influences say say we it, on what infrastructure doing last QX of was projects within we it a then can't really QX will let's that in the we as out or saw bottom be QX And And believe this in minus as and solid back what of which infrastructure exactly the versus the proven right a of in half we already were at look and which but had the and seeing XXXX. this same we quarter, back of it going and going today, going I stimulus then backlog, XXXX year-over-year already of QX those I QX. investment in development as over XXXX, book again coming the levels, activity kind elevated from last XX% year levels, thus, as in really the types plus the Frankly, of saw we architectural we development development in growth. second bidding investment see we base companies the with see steady And a then underpins X% year, into we're QX, in that's half, into quarter, on through and coming we now a on. kind were growth increasing patterns large around solid historical to look half the to look modest Then saw as that of believe our activity building development we municipalities we strong half. we out, we the QX, business go that the levels. feel throughout we second results think, XXXX. validated, position, growth QX we're we activities forward. going of that But real activity go But on, prior book, going delivery level realizing back that of of second building see and that remember relative so development the our growth to a we has the that to And to believe do XXXX year-over-year see first We in happens. combined be,

Judah Sokel

Okay, great. you. Thank

Operator

conference participating. this you As concludes no questions, [Operator are there ladies thank today’s We and further call. Instructions] for gentlemen

now You disconnect. may

BrightView (BV) 9 May 212021 Q2 Earnings call transcript