BrightView Reports Third Quarter Fiscal 2022 Results

BLUE BELL, Pa.–(BUSINESS WIRE)–BrightView Holdings, Inc. (NYSE: BV), the leading commercial landscaping services company in the United States, today reported unaudited results for the third quarter ended June 30, 2022.

“We delivered strong third quarter revenues powered by organic growth and our excellent M&A engine. In addition, we strategically managed through inflationary headwinds, most notably rising fuel prices, with tenacity and focus on positioning BrightView for long-term success,” said Andrew Masterman, BrightView President and Chief Executive Officer. “Although we are operating in a dynamic environment, our business fundamentals remain strong, our execution is at the highest level and our strategy is validated by the momentum in our business, giving us confidence that we remain poised for long-term profitable growth.”

1Adjusted EBITDA and Adjusted Earnings per Share are non-GAAP measures. 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.

Third Quarter Fiscal 2022 Highlights

  • Total revenue of $747.4 million, an 11.0% increase compared to $673.6 million in the prior year.
  • Maintenance revenue of $561.8 million, a 7.1% increase compared to $524.6 million in the prior year.
    • Land revenue of $548.9 million compared to the prior year of $521.2 million.
    • Snow revenue of $12.9 million compared to the prior year of $3.4 million.
  • Development revenue of $186.4 million, a 24.0% increase compared to $150.3 million in the prior year.
  • Net Income of $10.8 million, compared to Net Income of $25.2 million, in the prior year; Net Income Margin of 1.4%, compared to prior year Net Income Margin of 3.7%.
  • Adjusted EBITDA of $94.3 million, an increase of $0.7 million or 0.7% compared to Adjusted EBITDA of $93.6 million in the prior year; Adjusted EBITDA margin of 12.6%, a decrease of 130 basis points compared to Adjusted EBITDA margin of 13.9% in the prior year.
  • Net cash provided by operating activities of $23.4 million and Free Cash Flow of $2.3 million.

Nine Months Fiscal 2022 Highlights

  • Total revenue of $2,051.2 million, a 9.1% increase compared to $1,879.9 million in the prior year.
  • Maintenance revenue of $1,553.4 million, a 5.1% increase compared to $1,478.4 million in the prior year.
    • Land revenue of $1,296.3 million compared to the prior year of $1,193.2 million.
    • Snow revenue of $257.1 million compared to the prior year of $285.2 million.
  • Development revenue of $500.8 million, a 23.7% increase compared to $404.7 million in the prior year.
  • Net Loss of $1.3 million, and a net loss margin of 0.1%, compared to Net Income of $19.5 million, and a net income margin of 1.0%, in the prior year.
  • Adjusted EBITDA of $196.6 million, a decrease of $16.2 million or 7.6% compared to Adjusted EBITDA of $212.8 million in the prior year; Adjusted EBITDA margin of 9.6%, a decrease of 170 basis points compared to Adjusted EBITDA margin of 11.3% in the prior year.
  • Net cash provided by operating activities of $65.7 million and Free Cash Flow usage of $17.0 million.

Fiscal 2022 Results – Total BrightView

Total BrightView – Operating Highlights

Three Months Ended
June 30,

Nine Months Ended
June 30,

($ in millions, except per share figures)

2022

2021

Change

2022

2021

Change

Revenue

$

747.4

$

673.6

11.0%

$

2,051.2

$

1,879.9

9.1%

Net Income (Loss)

$

10.8

$

25.2

(57.1%)

$

(1.3

)

$

19.5

(106.7%)

Net Income (Loss) Margin

1.4

%

3.7

%

(230) bps

(0.1

%)

1.0

%

(110) bps

Adjusted EBITDA

$

94.3

$

93.6

0.7%

$

196.6

$

212.8

(7.6%)

Adjusted EBITDA Margin

12.6

%

13.9

%

(130) bps

9.6

%

11.3

%

(170) bps

Adjusted Net Income

$

39.8

$

46.6

(14.6%)

$

66.4

$

86.7

(23.4%)

Basic Income (Loss) per Share

$

0.12

$

0.24

(50.0%)

$

(0.01

)

$

0.19

(105.3%)

Earnings per Share, Adjusted

$

0.43

$

0.44

(2.3%)

$

0.65

$

0.82

(20.7%)

Weighted average number of common shares outstanding

93.2

105.2

(11.4%)

102.7

105.2

(2.4%)

For the third quarter of fiscal 2022, total revenue increased 11.0% to $747.4 million driven by $38.0 million from organic growth, or 5.6% of the total percentage increase quarter over quarter, and $35.8 million from acquired business, or 5.3% of the total percentage increase quarter over quarter. Net Income was $10.8 million compared to Net Income of $25.2 million in the prior year period. Total Adjusted EBITDA increased $0.7 million, or 0.7%, to $94.3 million from $93.6 million in the prior year period.

For the nine months ended June 30, 2022, total revenue increased 9.1% to $2,051.2 million driven by $58.8 million from organic growth, or 3.1% of the total percentage increase quarter over quarter, and $112.5 million from acquired businesses, or 6.0% of the total percentage increase quarter over quarter. Net Loss was $1.3 million compared to Net Income of $19.5 million in the prior year period. Total Adjusted EBITDA decreased $16.2 million, or 7.6%, to $196.6 million from $212.8 million in the prior year period.

Fiscal 2022 Results – Segments

Maintenance Services – Operating Highlights

Three Months Ended
June 30,

Nine Months Ended
June 30,

($ in millions)

2022

2021

Change

2022

2021

Change

Landscape Maintenance

$

548.9

$

521.2

5.3%

$

1,296.3

$

1,193.2

8.6%

Snow Removal

$

12.9

$

3.4

279.4%

$

257.1

$

285.2

(9.9%)

Total Revenue

$

561.8

$

524.6

7.1%

$

1,553.4

$

1,478.4

5.1%

Adjusted EBITDA

$

89.2

$

90.6

(1.5%)

$

197.4

$

212.5

(7.1%)

Adjusted EBITDA Margin

15.9

%

17.3

%

(140) bps

12.7

%

14.4

%

(170) bps

Capital Expenditures

$

18.5

$

13.3

39.1%

$

67.4

$

37.5

79.7%

For the third quarter of fiscal 2022, revenue in the Maintenance Services Segment increased by $37.2 million, or 7.1%, from the prior year. The increase was primarily driven by a $15.7 million revenue contribution from acquired businesses combined with an increase of $12.0 million, or 2.3%, in underlying commercial landscape services underpinned by a combination of contract services growth and to a greater extent ancillary services growth. Snow removal services increased $9.5 million principally driven by higher snowfall.

Adjusted EBITDA for the Maintenance Services Segment for the three months ended June 30, 2022 decreased by $1.4 million to $89.2 million from $90.6 million in the 2021 period. Segment Adjusted EBITDA Margin decreased 140 basis points, to 15.9%, in the three months ended June 30, 2022, from 17.3% in the 2021 period. The decreases in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin were principally driven by higher fuel costs and increased selling, general & administrative costs, including the reinstatement of the employer match for the employee savings plan and the investment to grow our business development team, which were partially offset by increases in revenues from underlying commercial landscape services and acquisitions discussed above.

For the nine months ended June 30, 2022, revenue in the Maintenance Services Segment increased by $75.0 million, or 5.1%, from the 2021 period. The increase was primarily driven by a $63.5 million, or 5.3%, increase in underlying commercial landscape services underpinned by a combination of contract services growth and to a greater extent ancillary services growth, as well as a $60.7 million revenue contribution from acquired businesses. Offsetting this was a decrease of $28.1 million in snow removal services, net of $21.1 million from acquired businesses, due to overall less snowfall during the nine months ended June 30, 2022 as compared to the 2021 period.

Adjusted EBITDA for the Maintenance Services Segment for the nine months ended June 30, 2022 decreased by $15.1 million to $197.4 million from $212.5 million in the 2021 period. Segment Adjusted EBITDA Margin decreased 170 basis points, to 12.7%, in the nine months ended June 30, 2022, from 14.4% in the 2021 period. The decreases in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin were principally driven by the decrease in snow removal revenues and higher fuel costs which were partially offset by increases in revenues from underlying commercial landscape services and acquisitions discussed above.

Development Services – Operating Highlights

Three Months Ended
June 30,

Nine Months Ended
June 30,

($ in millions)

2022

2021

Change

2022

2021

Change

Revenue

$

186.4

$

150.3

24.0%

$

500.8

$

404.7

23.7%

Adjusted EBITDA

$

20.9

$

18.7

11.8%

$

48.2

$

46.6

3.4%

Adjusted EBITDA Margin

11.2

%

12.4

%

(120) bps

9.6

%

11.5

%

(190) bps

Capital Expenditures

$

2.8

$

2.7

3.7%

$

10.9

$

5.0

118.0%

For the third quarter of fiscal 2022, revenue in the Development Services Segment increased by $36.1 million, or 24.0%, compared to the prior year. The increase was principally driven by an increase in Development Services project volumes of $21.1 million coupled with $15.0 million of revenue contributions from acquired businesses.

Adjusted EBITDA for the Development Services Segment for the three months ended June 30, 2022 increased $2.2 million, to $20.9 million, compared to the 2021 period principally due to the increase in revenues described above. Segment Adjusted EBITDA Margin decreased 120 basis points, to 11.2% for the quarter from 12.4% in the prior year primarily as a result of increased use of subcontractors due to the mix of projects performed during the period, reinstatement of the employer match for the employee savings plan and higher fuel costs, partially offset by lower material costs as a percentage of revenue.

For the nine months ended June 30, 2022, revenue in the Development Services Segment increased by $96.1 million, or 23.7%, compared to the 2021 period. The increase was principally driven by a $51.8 million revenue contribution from acquired businesses combined with an increase of $44.3 million due to additional project volumes.

Adjusted EBITDA for the Development Services Segment nine months ended June 30, 2022 increased $1.6 million, to $48.2 million, compared to the 2021 period principally due to the increase in revenues described above, partially offset by higher materials costs. Segment Adjusted EBITDA Margin decreased 190 basis points, to 9.6% for the nine months ended June 30, 2022, from 11.5% in the 2021 period, primarily as a result of higher materials and fuel costs as a percentage of revenue, partially offset by lower labor and subcontractor costs as a percentage of revenue.

Total BrightView Cash Flow Metrics

Nine Months Ended
June 30,

($ in millions)

2022

2021

Change

Net Cash Provided by Operating Activities

$

65.7

$

133.4

(50.7%)

Free Cash Flow

$

(17.0

)

$

96.2

(117.7%)

Capital Expenditures

$

88.1

$

44.7

97.1%

Net cash provided by operating activities for the nine months ended June 30, 2022 decreased $67.7 million, to $65.7 million, from $133.4 million in the prior year. This decrease was due to a decrease in the cash provided by accounts payable and other operating liabilities principally due to the repayment of the payroll tax deferral under the CARES Act coupled with a reduction in cash provided by other operating assets. This was partially offset by an increase in cash provided by unbilled and deferred revenue and accounts receivable.

Free Cash Flow decreased $113.2 million to an outflow of $17.0 million for the nine months ended June 30, 2022 from an inflow of $96.2 million in the prior year. The decrease in Free Cash Flow was due to the decrease in net cash provided by operating activities described above, and an increase in cash used for capital expenditures, as described below.

For the nine months ended June 30, 2022, capital expenditures were $88.1 million, compared with $44.7 million in the 2021 period driven principally by receipted orders previously impacted by pandemic-related supply chain challenges. The Company also generated proceeds from the sale of property and equipment of $5.4 million and $7.5 million during the nine months ended June 30, 2022 and 2021, respectively. Net of the proceeds from the sale of property and equipment, net capital expenditures represented 4.0% and 2.0% of revenue in the nine months ended June 30, 2022 and 2021, respectively.

Total BrightView Balance Sheet Metrics

($ in millions)

June 30, 2022

June 30, 2021

September 30, 2021

Total Financial Debt1

$

1,394.9

$

1,173.1

$

1,179.7

Total Cash & Equivalents

26.3

125.0

123.7

Total Net Financial Debt2

$

1,368.6

$

1,048.1

$

1,056.0

Total Net Financial Debt to Adjusted EBITDA ratio3

4.8x

3.5x

3.5x

1Total Financial Debt includes total long-term debt, net of original issue discount, and finance lease obligations

2Total Net Financial Debt equals Total Financial Debt minus Total Cash & Equivalents

3Total Net Financial Debt to Adjusted EBITDA ratio equals Total Net Financial Debt divided by the trailing twelve month Adjusted EBITDA.

As of June 30, 2022, the Company’s Total Net Financial Debt was $1,368.6 million, an increase of $320.5 million compared to $1,048.1 million as of June 30, 2021. The Company’s Total Net Financial Debt to Adjusted EBITDA ratio was 4.8x and 3.5x as of June 30, 2022 and June 30, 2021, respectively.

On April 22, 2022, the Company, entered into Amendment No. 6 to the credit agreement (the “Existing Credit Agreement”) dated December 18, 2013. The Existing Credit Agreement was amended to provide for: (i) a $1,200.0 million seven-year term loan (the “Series B Term Loan”) and (ii) a $300.0 million five-year revolving credit facility. The Company used the net proceeds from the Series B Term Loan to repay all amounts outstanding under the Company’s Existing Credit Agreement.

On June 22, 2022, the Company entered into the Third Amendment to the Receivables Financing Agreement which extended the term through June 22, 2025 and increased the borrowing capacity to $275.0 million. All amounts outstanding under the Receivables Financing Agreement are collateralized by substantially all of the accounts receivable and unbilled revenue of the Company. During the nine months ended June 30, 2022 the Company borrowed $224.0 million against the capacity and voluntarily repaid $203.0 million. During the nine months ended June 30, 2021 the Company borrowed $24.5 million against the capacity and voluntarily repaid $24.6 million.

About BrightView

BrightView (NYSE: BV), the nation’s largest commercial landscaper, proudly designs, creates, and maintains the best landscapes on Earth and provides the most efficient and comprehensive snow and ice removal services. With a dependable service commitment, BrightView brings brilliant landscapes to life at premier properties across the United States, including business parks and corporate offices, homeowners’ associations, healthcare facilities, educational institutions, retail centers, resorts and theme parks, municipalities, golf courses, and sports venues. BrightView also serves as the Official Field Consultant to Major League Baseball. Through industry-leading best practices and sustainable solutions, BrightView is invested in taking care of our team members, engaging our clients, inspiring our communities, and preserving our planet. Visit www.BrightView.com and connect with us on TwitterFacebook, and LinkedIn.