BrightView Reports Second 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 second quarter ended March 31, 2021.

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“We are very pleased with an exceptional quarter and our continued strong performance in fiscal year 2021. These results are due to the team executing on our strategy and we believe underpins our guidance going forward. Despite ongoing COVID-19 headwinds, our fiscal second quarter performance was driven by meaningful growth in our annual contract snow business and continued improvement in Maintenance Land organic growth, a testament to the investments made in our expanded sales teams and sales enablement technologies. In addition, the significant Adjusted EBITDA margin expansion versus the prior year and continued strong cash generation are a result of the ongoing leverage of our technology and productivity initiatives," said Andrew Masterman, BrightView President and Chief Executive Officer. “BrightView’s success comes from the efforts of every one of our 20,000 plus team members and they continue to do an incredible job by prioritizing health and safety, focusing on client relationships, and by delivering solid results in a challenging operating environment. The consistency and resiliency of our model continues to reflect fundamental strengths. Coupled with ongoing execution of our M&A strategy, we remain confident in our ability to create significant shareholder value.”

¹ Adjusted EBITDA is a non-GAAP measure. Refer to the “Non-GAAP Financial Measures” section for more information. The Company is not providing a quantitative reconciliation of its financial outlook for Adjusted EBITDA to net income (loss), its corresponding GAAP measure, because the GAAP measure that is excluded from its non-GAAP financial outlook is difficult to reliably predict or estimate without unreasonable effort due to its dependence on future uncertainties, such as items discussed below. Additionally, information that is currently not available to the Company could have a potentially unpredictable and potentially significant impact on its future GAAP financial results.

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.

Second Quarter Fiscal 2021 Highlights

• Total revenue of $651.9 million, a 16.6% increase compared to $559.1 million in the prior year.
• Maintenance revenue of $535.7 million, a 29.6% increase compared to $413.5 million in the prior year;
  • Land revenue of $309.7 million compared to the prior year of $311.0 million;
  • Snow revenue of $226.0 million compared to the prior year of $102.5 million.
• Development revenue of $117.1 million compared to the prior year of $146.3 million.
• Net Income of $6.3 million, or $0.06 per share, compared to Net Loss of $20.5 million, or $(0.20) per share in the prior year; Net Income Margin of 1.0%, an improvement of 470 basis points compared to prior year Net Loss Margin of 3.7%.
• Adjusted EBITDA of $66.8 million, an increase of $27.9 million or 71.7% compared to Adjusted EBITDA of $38.9 million in the prior year; Adjusted EBITDA margin of 10.2%, an increase of 320 basis points compared to Adjusted EBITDA margin of 7.0% in the prior year.
• Net cash provided by operating activities of $78.3 million and Free Cash Flow generation of $62.9 million.

Six Months Fiscal 2021 Highlights

• Total revenue of $1,206.3 million, a 6.8% increase compared to $1,129.8 million in the prior year.
• Maintenance revenue of $953.8 million, a 14.6% increase compared to $832.4 million in the prior year;
  • Land revenue of $672.0 million compared to the prior year of $674.3 million;
  • Snow revenue of $281.8 million compared to the prior year of $158.1 million.
• Development revenue of $254.4 million compared to the prior year of $299.1 million.
• Net Loss of $5.7 million, or ($0.05) per share, and a net loss margin of 0.5%, compared to Net Loss of $33.1 million, or ($0.32) per share, and a net loss margin of 2.9%, in the prior year.
• Adjusted EBITDA of $119.3 million, an increase of $28.8 million or 31.8% compared to Adjusted EBITDA of $90.5 million in the prior year; Adjusted EBITDA margin of 9.9%, an increase of 190 basis points compared to Adjusted EBITDA margin of 8.0% in the prior year.
• Net cash provided by operating activities of $83.4 million and Free Cash Flow generation of $58.9 million.

Fiscal 2021 Results – Total BrightView

For the second quarter of fiscal 2021, total revenue increased 16.6% to $651.9 million driven principally by an increase in Maintenance Services revenues of $122.2 million. Net Income was $6.3 million compared to Net Loss of $20.5 million in the prior year period. Total Adjusted EBITDA increased $27.9 million, or 71.7%, to $66.8 million from $38.9 million in the prior year period. Maintenance Services Segment Adjusted EBITDA increased $31.6 million, or 77.6%, to $72.3 million compared to $40.7 in the prior year period, principally driven by the increase in snow removal revenue. Development Services Segment Adjusted EBITDA decreased $3.3 million to $10.9 million from $14.2 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 six months ended March 31, 2021, total revenue increased 6.8% to $1,206.3 million driven principally by an increase in Maintenance Services revenues of $121.4 million. Net Loss was $5.7 million compared to Net Loss of $33.1 million in the prior year period. Total Adjusted EBITDA increased $28.8 million, or 31.8%, to $119.3 million from $90.5 million in the prior year period. Maintenance Services Segment Adjusted EBITDA increased $33.5 million, or 37.9%, to $121.9 million compared to $88.4 million in the prior year period, principally driven by the increase in snow removal revenue. Development Services Segment Adjusted EBITDA decreased to $27.9 million from $33.3 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 second quarter of fiscal 2021, revenue in the Maintenance Services Segment increased by $122.2 million, or 29.6%, from the 2020 period. Revenues from snow removal services were $226.0 million, an increase of $123.5 million over the 2020 period and revenues from landscape services were $309.7 million, a decrease of $1.3 million over the 2020 period. The increase in snow removal services is primarily attributable to the increased frequency of snowfall events and the higher relative snowfall in the three months ended March 31, 2021 compared to the 2020 period (for our current geographic structure, snowfall for the three months ended March 31, 2021 and 2020 was 97.8% and 49.6%, respectively, of the historical 10-year average for that three-month period per NOAA¹). The decrease in landscape services revenues was primarily driven by a $12.2 million decline in commercial landscape services, offset by a $11.7 million revenue contribution from acquired businesses.

Adjusted EBITDA for the Maintenance Services Segment for the three months ended March 31, 2021 increased by $31.6 million to $72.3 million from $40.7 million in the 2020 period. Segment Adjusted EBITDA Margin increased 370 basis points, to 13.5%, in the three months ended March 31, 2021, from 9.8% in the 2020 period. The increases in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin were principally driven by the increase in Maintenance Services revenues discussed above.

For the six months ended March 31, 2021, revenue in the Maintenance Services Segment increased by $121.4 million, or 14.6%, from the 2020 period. Revenues from snow removal services were $281.8 million, an increase of $123.7 million over the 2020 period and revenues from landscape services were $672.0 million, a decrease of $2.3 million over the 2020 period. The increase in snow removal services is primarily attributable to the increased frequency of snowfall events and the higher relative snowfall in the six months ended March 31, 2021 compared to the 2020 period (for our current geographic structure, snowfall for the six months ended March 31, 2021 and 2020 was 102.1% and 62.2%, respectively, of the historical 10-year average for that six-month period per NOAA). The decrease in landscape services revenues was driven by a $35.9M decrease in commercial landscape services and $1.7 million due to divestitures, offset by an increase of $35.3 million revenue contribution from acquired businesses.

Adjusted EBITDA for the Maintenance Services Segment for the six months ended March 31, 2021 increased $33.5 million, to $121.9 million, compared to $88.4 million in the 2020 period. Segment Adjusted EBITDA Margin increased 220 basis points, to 12.8%, in the six months ended March 31, 2021, from 10.6% in the 2020 period. The increases in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin was principally driven by the increase in snow removal revenues described above and the decrease in Selling, general, and administrative expenses due to cost containment actions.

For the second quarter of fiscal 2021, revenue in the Development Services Segment decreased $29.2 million, or 20.0%, compared to the 2020 period. The decrease in Development Services revenues was principally driven by a $33.4 million reduction due to reduced backlog as a result of the COVID-19 pandemic, partially offset by a $10.3 million revenue contribution from acquired businesses. In addition, the sale of BrightView Tree Company in September 2020 reduced revenues by $6.1 million for the three months ended March 31, 2021.

Adjusted EBITDA for the Development Services Segment for the three months ended March 31, 2021 decreased $3.3 million, to $10.9 million, compared to the 2020 period 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. Segment Adjusted EBITDA Margin decreased 40 basis points, to 9.3% for the quarter from 9.7% in the 2020 period.

For the six months ended March 31, 2021, revenues for the Development Services Segment decreased $44.7 million, or 14.9%, compared to the 2020 period. The decrease in Development Services revenues was principally driven by a $46.7 million reduction due to reduced backlog as a result of the COVID-19 pandemic, partially offset by a $14.7 million revenue contribution from acquired businesses. In addition, the sale of BrightView Tree Company in September 2020 reduced net service revenues by $12.7 million for the six months ended March 31, 2021.

Adjusted EBITDA for the Development Services Segment for the six months ended March 31, 2021 decreased $5.4 million, to $27.9 million, compared to the 2020 period. The decrease in Segment Adjusted EBITDA was 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. Segment Adjusted EBITDA Margin remained relatively flat at 11.0% in the six months ended March 31, 2021, from 11.1% in the 2020 period.

Net cash provided by operating activities for the six months ended March 31, 2021 decreased $2.3 million, to $83.4 million, from $85.7 million in the 2020 period. This decrease was due to a reduction in the cash provided by accounts receivable and unbilled and deferred revenue, offset by a decrease in cash used by other operating assets and accounts payable and other operating liabilities.

Free Cash Flow increased $5.6 million to $58.9 million for the six months ended March 31, 2021 from $53.3 million in the 2020 period. The increase in Free Cash Flow was due to a decrease in cash used in capital expenditures, partially offset by a decrease in cash provided by operating activities as described above.

For the six months ended March 31, 2021, capital expenditures were $27.9 million, compared with $35.1 million in the prior year. The Company also generated proceeds from the sale of property and equipment of $3.4 million and $2.7 million during the six months ended March 31, 2021 and 2020, respectively. Net of the proceeds from the sale of property and equipment, net capital expenditures represented 2.0% and 2.9% of revenue in the six months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, the Company’s Total Net Financial Debt was $1,047.5 million, a decrease of $118.9 million compared to $1,166.4 million as of March 31, 2020. The Company’s Total Net Financial Debt to Adjusted EBITDA ratio was 3.5x and 4.1x as of March 31, 2021 and March 31, 2020, respectively.

Recent M&A Activity

In April 2021, BrightView acquired Birch, Incorporated based in St. Paul, Minnesota. Founded in 1978, Birch provides a full suite of winter services, landscape maintenance and enhancements, tree care and irrigation services. Combined with our December 2020 acquisition of Cutting Edge, this transaction further solidifies BrightView as the service leader in a desirable Upper Midwest market.

COVID-19

• Throughout the entire country, landscape maintenance continues to be recognized as an essential service.
• All branches are operational with no limitations on the scope of services we can provide.
• Executed downturn playbook and are continuing to exercise prudence, limiting discretionary spending, and managing capital expenditures and working capital.

Conference Call Information

A conference call to discuss the first quarter fiscal 2021 financial results is scheduled for May 6, 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 1459347. 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 May 6, 2021 to 11:59 p.m. EDT on May 13, 2021. To access the recording, dial (800) 585-8367 or (416) 621-4642 (Conference ID 1459347).