BrightView (BV) 3 Aug 232023 Q3 Earnings call transcript

Greetings, and welcome to the BrightView Q3 Fiscal 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Chris Stoczko, Vice President of Finance. Please go ahead.

Thank you for joining BrightView's third quarter fiscal 2023 earnings conference call. President Officer, Executive are Interim Urban, and BrightView’s Financial Chief on Abrahamson, and Officer; Chief Brett Jim the call.

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

to turn will call Jim. over I the now

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our our team. member plan BrightView role the I'm improving board leading expanded past BrightView focused more my CEO, of concert performance as and in and a As and in years, strategic execution with company creation for President excellent the eight and interim recently on

balance grow and drive and expanding are sheet, performance EBITDA, to our thereby cash free as opportunities while We flow, shareholder enhancing our strengthening on value. revenue we margins, increasing our capitalizing

our the quarter We report progress objectives. those financial to reflect are each of third substantive for proud results that against

quality cash and about has business pursuing encouraged strong expansion, cost disciplined opportunities, while approach into our our high increased efficiencies that flow. to increasing margin translated are We particularly growth, EBITDA

business, phase the first the assessment Project our during of Following second strategic Accelerate we quarter. the launched of

this reminder, reduce to designed a is company-wide overhead As a program costs.

expanded have sheet. across more scope Project strategic of profit the thereby We around margins expanding broadened growing all new operating centered initiatives cost Accelerate expanded intensified revenues, of Project with now facets our our recently We delever efficiently, company. more to even depth the containment and the balance our and the even initiatives reach and our cash Accelerate of generating

project growth, including contract importantly, centered clear, not new the across branch items procurement initial added the local and rollout entire initiatives sales to important these initiatives our aim are segments, to we've and mildly initiatives, rates significant to win around following across retention, launch performance company-wide customer we To Accelerate, during savings contract third our increase to Project a be As to have portfolio. drive profitable substantially revenue we waiting commenced expanded and the improving quarter.

expect that margins, Looking sheet. growth, XXXX fiscal continue increasing initiatives year balance outlook profitable we cash delever these to initial fiscal year to our forward enhance on of XXXX, will generate remainder flow drive to our and the and

effectiveness An to the our details initiatives provide the next The on of important new be on calls. will our progressing search selection and these upcoming magnitude timeline. according is resulting of on these the earnings for of additional performance of catalyst We to well each and our continued initiatives expect impact CEO. driving

new With leader company-wide energy, exceptional the and foundation operator with performance through executive the on ground and growth an phase next work This hit leadership team, and will to company lead closely drive to search enhance results to a running the that leader engaged a and drive be will an our board and BrightView strength prospects bringing BrightView We're have that strategy executive a to growth I'm coupled and focus clear presently for firm, confident continuing and and effective with will our and shareholders strong qualified excellent well an with of value with the drive candidates. are are strategy by renewed shortlist into its of highly We of excited of and the outstanding new deliver now future. positioned value creation. forward will

to that, financial discuss Brett. outlook more over our in Brett, now With who'll detail. I'll turn performance it and

on X. Thank you, quarter. report pleased Slide I and Jim, start to on I'll good solid am everyone. another morning to

has the million, expanding, Increased $X delivered and profitability previewed, is total meaningful segments, grew We Jim both As improved is revenues growing, increased in significantly expansion EBITDA more margin interest. despite by generation business significantly. X.X%, and cash cash generated by

ability as Our confidence pursue drive us to reflects attractive model, BrightView's we improvement. these further operational opportunities achieve business gives and financial and results new and

the revenue million, land increased was during X.X% acquisition. year-over-year Revenue demand pricing, revenue organic by our increased during total to quarter our from $XXX higher impacted to and quality million. to positive flat businesses, benefited our growth the total $XXX core M&A in X, increased In Moving reflecting Organic on focus contract contributions. quarter business, roughly from favorable Slide growth opportunities. and land pursuing contributions

seeing about leading we convert business our optimistic XXXX. continued our XXXX, pipeline to on robust We remainder backlog. projects disciplined and fiscal the development for pricing very strong a significant of and due the We primary strategy, focus, the remain business in execution our later to reasons of X.X% into grew continued and the More improvement. ability organically momentum margin our the fiscal development this for was our that are the However, of one of call.

profitability EBITDA management. both of growth details on for and Slide Total disciplined land the $XXX quarter by million, development to adjusted the cost third was and and $X now X. Turning driven increase million, an

cost result price-cost Project initiatives Our our and increased on on Accelerate. the performance, to business, our related progress of profitability is operational quality focus higher dynamics, good

to annualized our these target million the the contribution $XX exceed the last of financial we earnings Project With quarter. call. the next on now and discussed specific more provide plan expansion on initiatives to Accelerate, the we We timing expect benefit details of

Slide leave I the with future expand grow reiterate want in on and margins, We quarter. intend X, to quarters. commitment excited our to delivered Before profits and are the that in our to EBITDA results our how we trend continue I

our the X, million XX to Slide the This margin the million adjusted In of consecutive EBITDA year. basis approximately I'll in and significant on segment, in land prior $X business. margin increased expansion Turning of third marks provide quarter margin total expansion. details of more from year-over-year, resulted $XX points maintenance core by expansion

quality to higher with our We pricing focused contracts and on strategic efforts. be continue

approximately this end prior year-over-year XX our fourth increase XX will we While of This compared a development segment, result in margin development growth, the we was points the margin of land have believe adjusted $XX.X an year. accretion saw and modest to EBITDA in to our guidance dynamic expansion, these and efforts marks XX at for of range continue. points. led the of third XX% strategy we quarter long short-term run this In consecutive expanded the of in continued high ultimately to as was Development expect quarter our softening margin million, basis QX to the organic basis results.

flow Slide quarter million compared for free decrease. was year, the the for Let's a now nearly $XX Net XX% our year-over-year capital in to third to turn prior quarter. review expenditures, million $XX to XX CapEx debt, reflecting cash the and

these evidenced our are As expenditures. continuing our by results, capital carefully managing we of approach

to further expenditures our be meaningfully We and X% have target for than year, made capital year revenue are significant XXXX. progress reducing so of total far fiscal this less for

free our times million our through to benefit $X reduced profitability. our increased disciplined flow versus expectations. to to million cash leverage this net incremental an cash Sequentially, management X.X expect We improved by and prior we ratio debt and $XX

year-over-year cashflow committed expansion debt improved of expenditures, improvement to great on our of time doubling than expect the to free remainder and about for basis, $XX are the reduced and again interest. reducing the from for profitability fiscal million cashflow We through over quarter. leverage feel XXXX. Free capital increasing benefited continue to more it Free and improved We reduction. cashflow a EBITDA cash offsetting

the to Let's year XXXX. now our fourth review and turn XX outlook for quarter fiscal Slide full to

year-to-date for in efforts topline profitable flow, improve pleased have our growth and to key margins cash in with are results our the our fourth progress driving and our outlook of more reflect focus quarter we While seen results continued and on parts our the business.

our Given year these modestly revenue are full guidance. factors, we revising

to As billion, $X.XX we total million. you adjusted billion EBITDA total fiscal to can and year for see of $XXX on the of million revenues $X.XX $XXX now XXXX, slide, expect

this million. of total For to million, of the $XX $XXX equates total EBITDA fourth and to million $XXX quarter, million $XXX to adjusted revenues

on that of strategy, contracts higher our organic expansion to the following; the our Accelerate performance. development about for guidance which growth expansion of prior development flat XX%, our quarter Our continue assumes basis as basis is initiative margin guidance, of focus land above above to expansion is our growth relatively important the points, we and XX execution organic we maintenance XX think pricing longer-term The is XX fourth margin consider of Project points. XX as to significantly quality and

to is ability provide Our meaningful beyond. against in expected fiscal these and to our efforts deliver and contributions XXXX execute to results

turn to to XX Slide let's up. Now, wrap

business, focus have initiatives. see pleased and taken level and important open Thank with our With we very our are you to dedicated morning. key our attention interest in now to your for we We'll to and continue goals. questions. this and against year-to-date renewed momentum as results improve steps business We to for of are our call energy, your for continuing achieving execute your the a

first Blair. ahead. Our please Instructions] question from Tim, Tim Mulrooney go [Operator comes from William

our Tim. Hey, for this Thanks on Sam Kusswurm here. questions taking for is

for few. back X% start, your Just believe here. in the guess half last quarter to land I X% have expectations a I to organic growth were

be drove you it's what on like Now that I'm it'll guess change. could wondering flat. I looking expand if

is This question. great Yes, Brett.

total results, growth both X.X%, we're showed the You three, with organically growth the about company and was grew quarter we're three QX excited the The in excited growing. think we X.X%, about quarter guidance. and In QX. segments of is company,

in organic which So, comes and you higher we’re and expansion price and have sales as the that think Project of new prudent now QX saw comes in And we the modest excited we're organic sales the guidance Project term with expanded short relatively new are flat we'll quarter. it of as to the Accelerate, Accelerate our quality softening business. increase you customer to are focus and our about to and bringing go client sales land renewals, higher about it a expect led those short see being margin retention extremely QX. in new results. to in strategy continue land of business. And expands as as When that But next it to expansion expansion we we growth renewals term, very outsized into do to judicious specifically, for pricing on focused that drive on both relates strategy relates wins, into this when strategy, through business quality margin when it to our

helpful. costs current SG&A out Got given that pivoting then to sustainable levels Maybe a in those your bit, of That's have you view? program, SG&A the that significant some you. costs you'll do back Accelerate think but taken of eventually this to are you've bring program with or

under Yes, question. Being we to on years, This overhead for Always we makes good saw XX and tick, Abrahamson. back a company considering around costs able is important when escalation for were thanks handle this. I've bring that where the the got it Jim what control. last you're this

importantly, we've really deeper the More across a organization. taken dive

would. this So, just expanding you SG&A, if we're beyond

of corporate that If expanded where the topline, thinking our expense to get in company. level top categories now remainder or the was it into phase. initial you're the call We've focus

broadening of those looking productivity widely got as five where those Each areas, across about the is is, a the the company. such other branch areas performance, as deepening we on and our really program we're So, areas, distributed the call. opportunity such that we've talked of because team and

company we're we there's on measures having of nature. found. able operates, a will place, handle these believe this I what time. this put and on be good prudently based restructured period And control So, think great these cost We’ve we our in think company don't a opportunity. we was permanent savings believe short-term into We to how over

but we targets what reductions. as guidance have these on to are, roll permanent these to out, guiding in future So, we'll continue our be the we're more

look We'll sneak one I'll forward that. here. great. Maybe in one Okay, last to

some maybe that? and to improving you retention, mentioned here to achieve prepared think the commentary that I in do remarks for about your what customer share level. detail exactly of contract Can your more trying you're just you

Yes, question. great

years prudent were two were pricing we with As rebound strategy around right historical about and a retention continuing back that pricing it you inflation dynamics. we half, launching and year seen now. the pricing We're when and by strategy, to in very not ago a X% We've our inflation think was peaking stabilize, customers call judicious pre-hyperinflation. renewing but rates that levels, fighting

So, and getting really pricing, as and that now back which we than focus, X% back high internally, the track we customer inflation to years branch metric range getting in now a less into expanding initiative a think about is we CPIW, performance X.X%. two to for that expect CPI, is with

our back subside. impact will a basics to the on focus That and expect the pricing bit an We aggressiveness customer to have start on on to branches. in more retention

impact to to retention. expect We an that have

we as a in of it are launch but seeing year-over-year, Project in expansion see to the we we So, retention. would future rebound expect Accelerate, the stabilize

guys. for you. the answers, Got Thanks

Thank you.

comes from Our next ahead. Bob Securities. go from CJS question please Labick Bob,

It's for Lukas Bob. good Hi, Pete morning.

about off services fuel margins the normal for average talked back declines. to five-year XX.X% as price snowfall being development to margins increases, at old bridge before XX% the well You've as and using price running

XX.X that wondering bridge, still a - the target Accelerate you? and how Just viable half% impacts medium Project for still this is

question. XX% great Accelerate, to the margin as Project rebounding, right? of XX and a XX.X% So, right for said on now, into think basis that's phase in next through us about committed expansion, prior XXXX, of Project snow see initial we guidance margin points would Pete, you really that year. basis expansion, we Look, low Yes, its without in range that's to secured Accelerate call, already XX bringing our points have around EBITDA.

original plus share in more of additional the we'll Project margin, Accelerate, that next expansion But the those snowfall, Project call. more which and with to a about range, expecting between you low us of what if expansion communicate XX and call. would on exactly the somewhere Now, normalized the in Accelerate, margin plus are EBITDA puts meaningfully communicated, above we'll XX Accelerate on we're be what think expansion was mid high range, XX% margin points more earnings of numbers basis originally which in the Project XX% our next

about bridge mid become getting start think you expansion the as of as is to Project the provided will all So, incremental for back we to that margins XX solidify to the company, that that of pre-pandemic Accelerate,

scope back more, again? And or guess. Thanks. helpful. Very I one trending, starting to work then and just size is pulling are the How contract customers is of grow

Yes, great question.

either no backlogs beginning the seen we already have In We business. year. sign of customer half pullback sell our through second in development next to are the business, of

actually So, We that next sight the in our that services. of KPIs. getting any increased And demand which positive down track we're no demand in into a the We customers. half we in seeing of to slowdown. the services see we We provide versus internal line quarter first expect side an increase great three the we're year. business, from indications and last those slowing on show outside-the-contract quarter of saw see we to our of for don't year, have is some services, maintenance of business, ancillary three

So, from the standpoint no demand we either a customer signs business, a side slowdown. of on of see

Great. there? you of a me. quick been the Have heat seen Has And a areas? major just from any impact, your last in anything particularly weather one

us safety. just you a sure are multiple would important is was, business, through the to least. about productivity And areas, came want would safe. that job, I most wave Yes, from the the heat the extremely thing We impact say But hot think our on to say, on little. in the as employees very the say make I country to

So, break but employees, from if wave impact to couple be business our here for on extra major needs or have any minutes that's first there came and through. just an that seen foremost, that there we underlying heat not the

add just I'll Yes, that. to

issues a year, same isn't heat lot we everything kind the on. was of really we there disruption This were last of kind This creating creating the weather of showed disruption. those same isn't that think I reported - earlier and California rainfall rains kind of disruption. on,

as of hot other steady really been it's goes So, it's summer. course, year, this a from overall standpoint personally, than an weather she

jump Great. in queue. back Thanks so much. the I'll

you. Thank

question Tong go ahead. next from Goldman comes Our please from George, Sachs. George

morning. Good thanks. Hi,

this declined example? driven talk and because pricing, commercial of you that landscape contract-based how Can demand. that whether business Your was year-over-year ancillary, environmental a bit from, maintenance a is bit external little it's to reduced quarter business, right-size where about for internal demand in whether initiatives by much the of little factors versus reduction coming it's

from are how hear George, you to This Brett. is today. you Great Yes, doing?

services maintenance standpoint grew. that So, from year-over-year, a business

grew point that small within And was our in was growth. clarify, to of a Just decline business. about half a snow

quarter little business as we $X disclosed We very in That million. about some. have in three, backwards have snow went but do

total the and land snow call about of which maintenance impact it, So, X% was without relatively M&A grew of of that in contributions services growth. organic X%, growth flat about

about clarify before, just you is than initiatives as say we business impact rather would bigger land organic So, the mentioned I the And that is think - growing. internal factors. growth, external to we as are

That We continuing margin prudent ensuring new to high are strategies, we're are business a business And accretive that in the to sales making be pricing company. is in strategies sure that from the our quality, bringing on we're is our high pricing business. we customer margin perspective renewals. the

balance did which sheet, all again about did do profits, for QX, QX. more that's company delevering generating did and think margins, also the cash the do we to ultimately and expect in overall QX, which QX in again and in our we in towards you in growing strategy and leading QX of which As growing we to expect

think, organic guess, land And I X.X% year-over-year. yes, I organic, which was, really, asking about performance, That's I helpful. down Great. was

talked internally to spending, initiatives? little and priorities about context. for what you would lot these are a around and you to new various retention, a Accelerate. it's these, How tackle benefits? be containment, ordering What on cost see various expect procurement. revenue And would that's Certainly, the with timelines when the then Project bit making So, margin what you are Project helpful the associated sales, and performance, progress progress branch rank Accelerate are customer

focused that's Yes, where now. exactly right we're

too. is targets targets So, performance down. issues, We're on internally. team isn't has some just be. have not company-wide a where we've initiative been focused this taking This operations - bread our a That's intend our branch effort. important. calibrated teams that's this what a top This butter, live Clearly, really customers been is hitting performance the our vitally to those and right? there and And

thing So, look first equally all now. to is in too, not that, the are at performing doing branches right

the be your aggressive So, achievable bottom of steps quartile bottom or look underperformers tier branches are driven those That's opportunities of tier fixing that bottom very in are able and place. the branches. first obviously, eyes to step, at deliberate a to to very of type

So, and we've created the there. action data plan and to an the research start

performance, be that showing right, those believe achieve able really to there's the Overall as within fixing near-term top from out quartile, performing see cost improvement quartiles, opportunities revenue you to optimizing We continuous as best bottom in results ancillary to we're penetration if We markets. expect able would. it's well branches. then, upside building our to as both our and

in organizational team control layers to able the we is the there. street a is and broadest. have winning management. what locally of at that corner run This areas more of do is calibrate and obviously, performance, This spans us our be customer important biggest what business. business. our business, and really down the we - next call So, looking to less and of a phase the is that's front structure That's losing the and

performance more and very goals, those what harvest of initiative quantifiable can are. technology that items you allow to discrete restructure So, kind place. optimize closely We'll Then lot using and quickly. fairly effective. efficient achievable we're and that us be can if we think, opportunities some those are be looking benefits will Again, And that put we we from into to, They're able help business a and us to take. at very and actions retention right? allow rates, we've Win what to the to evolve that's seen immediate those over decline. We time, think to do. past. levels, strives there's right? those new win retention we that rates Putting rates beyond but those initiatives some believe And reported at look less, programs, on company-wide in every We've upside recovery and win there's perform that it. better, us more, contract back training lose earlier

procurement, center is return Lastly, currently spend Procurement, very discrete quantifiable, significant national project covered identified right is now. we've of component. well more the a much this not a programs. by of is, here think level early again, We That underway account that line. a achievable again,

consulting us employed have We some top that that helping firms tier are roll out.

implemented to that around. believe over the - be we'll information more out of more for the in ‘XX here going harvesting will FY into we're at you results rolled So, next plans - QX, go right away from this when Accelerate course and have importantly, on we Project next the be but our

I this focus big It's think that can distributed, got and got a great we've team this. areas specific these leadership where widely a is - to but you see company a in company. implement we've - it's

effort. it's team a So,

Very helpful. Thank you.

instructions]. Thank [Operator you.

Hauke from question next from Baird. comes Our Justin

go please Justin, ahead.

is of guys assumption, reason always revenue to company's wanted since good kind things Hi, the have - public, M&A. because couple and been been of contribution there's why points about a the announced, ask had morning. M&A. haven't even just been when I annually Yes. ever from an you always

just curious, this press this had CEO quarter where got that and on you is you've done cash and flow think I'm with free - release I about you're be search acquisitions. from you've is thinking status and contribution kind next what's deleveraging think focus year, the that what of for first underway. the you've now, any pause term the Obviously, near stands about as shouldn't officially XXXX, M&A the it on or of right there? we as doing it we didn't

question. Justin, Yes, great

for is, CEO search year-over-year, accretion, additional underway, That’s margin couple number sheet. a done our balance around cash delevering we're and of sheet. we've That our question way one, year. growing in You priority free to to using We're generate year-over-year. the pay that the million debt, cash months things first generation and over a Our right? focus up in earnings is which the free cash your to focus, flow of the kind down focus flow definitely $XX delever on balance of said nine

So, as our now to focus company. that is it right the comes

M&A As far it's would as relates on it I to specifically, say pause. not

official We pause. are not an

are being range with pipeline We down our into very presented strategic very Xx and still We selective have on acquisitions. previous We've M&A robust seen of calls. the like still multiples we've lower, come $XXX a north or million.

come just being those very as strategic selective and So, across, deals. in deals we are

we're modeling X% about think give for be XXXX as will years to yet target we've provided past. guidance but ready M&A, you in less likely it it As to relates the for than XXXX, not

is. much of you quarters? just just Okay, costs, margin fuel on for quantified other come have the are that continue they've And I sometimes will the something makes how and that been obviously tailwind sense. that. kind a has that - for I where Thank down. next had, the fuel question costs is Like, past, guess, to of they a you then lift right guys clarifying be of curious in now, that couple where I'm

about segment the fuel. a roughly was there QX in development, of that splits roughly you Fuel question. think the great XX% benefit to million split XX% P&L And year-over-year. as $X maintenance, Yes,

in Fuel gallon. continue expect So, fuel a a bit into call to quarter. XX is basis that Last rise about points QX were accretion to about $X.XX We'd it now. $X.XX the the on similar a right a it's $X to pace. gallon. XX QX, we at

year-over-year, somewhere in QX. the range a expect that when to be fuel it to So, should still point we'd comes XX for tailwind basis XX and

Great.

Okay. That's helpful. much. Thank you very

end over you. session, for is now so That remarks. I'll Q&A back Brett to Thank the closing hand Urban of now the

thank everyone thank want call earth. enhancing talking on participating your for team for members you and landscapes Thank Once creating, in We to forward you, maintaining, you interest designing, soon. to And to Operator. again, the our again. to look for Talk dedication our BrightView. in the I with today best and

Thank This for you joining. concludes day's call.

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