second quarter fiscal 2020 earnings call · 5/7/2020 · relating to employees, wage and hour,...

Second QuarterFiscal 2020Earnings Call

May 7, 2020

NYSE: BV

2Q FY2020 Earnings Presentation | 2

This presentation contains forward looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this presentation, including statements regarding our industry, strategy, future operations, future liquidity and financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “outlook,” “guidance,” “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. By their nature, forward-looking statements: speak only as of the date they are made; are not statements of historical fact or guarantees of future performance; and are subject to risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements. The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update any forward-looking statements. Factors that could cause actual results to differ materially from those projected include, but are not limited to: the duration and extent of the novel coronavirus (COVID-19) pandemic and the impact of federal, state, and local governmental actions and customer behavior in response to the pandemic and such governmental actions; the risk that our Maintenance and Development operations may be deemed not to be an essential business or service in jurisdictions where we operate; customer cancellations or delays of work; any adverse impact on the timing and collectability of payments to us from customers as a result of the impact of COVID-19 on them; operational disruptions if a significant percentage of our workforce is unable to work or we experience labor shortages, including because of illness or travel or government restrictions in connection with the COVID-19 pandemic and delays in H2-B visa processing; contracting and challenging business, economic and financial conditions, including conditions as a result of the COVID-19 pandemic; competitive industry pressures; the failure to retain certain current customers, renew existing customer contracts and obtain new customer contracts; a determination by customers to reduce their outsourcing or use of preferred vendors; the dispersed nature of our operating structure; our ability to implement our business strategies and achieve our growth objectives; acquisition and integration risks; the seasonal nature of our landscape maintenance services; our dependence on weather conditions; increases in prices for raw materials and fuel; product shortages and the loss of key suppliers; our ability to accurately estimate costs of a contract; the conditions and periodic fluctuations of real estate markets, including residential and commercial construction; our ability to retain our executive management and other key personnel; our ability to attract and retain trained workers and third-party contractors and re-employ seasonal workers; any failure to properly verify employment eligibility of our employees; subcontractors taking actions that harm our business; our recognition of future impairment charges; laws and governmental regulations, including those relating to employees, wage and hour, immigration, human health and safety and transportation; environmental, health and safety laws and regulations, including regulatory costs, claims and litigation related to the use of chemicals and pesticides by employees and related third-party claims; the distraction and impact caused by litigation, of adverse litigation judgments or settlements resulting from legal proceedings; increase in on-job accidents involving employees; any failure, inadequacy, interruption, security failure or breach of our information technology systems; any failure to protect the security of personal information about our customers, employees and third parties; our ability to adequately protect our intellectual property; occurrence of natural disasters, terrorist attacks, pandemics or other unforeseen adverse events; our ability to generate sufficient cash flow to satisfy our significant debt service obligations; our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements; restrictions imposed by our debt agreements that limit our flexibility in operating our business; increases in interest rates governing our variable rate indebtedness increasing the cost of servicing our substantial indebtedness including proposed changes to LIBOR; and counterparty credit worthiness risk or risk of non-performance with respect to derivative financial instruments. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under “Item 1A. Risk Factors” in our Form 10-K for the fiscal year ended September 30, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as such factors may be updated from time to time in our subsequent filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

Introductory Information

http://www.sec.gov/


Quarter Highlights and Business UpdateAndrew Masterman | President and Chief Executive Officer


COVID-19: Health & Safety

Keeping our employees, their families and our customers safe is our

number one operating principle

We are grateful for first responders and healthcare professionals

Implemented branch based hygiene and sanitization operating

procedures and social distancing protocols

Team members reporting directly to job site

Reduced crew size and number of workers at dispatch per truck


COVID-19: Business Continuity

Landscaping recognized as essential service

Executing downturn playbook and moving quickly to protect revenue and

margins and to preserve cash

Our team has navigated difficult cycles in the past

Cost containment actions to partially offset softness in revenue


2Q FY2020 Revenue

(Numbers $M) 2Q20 2Q19 Commentary

Total Revenue $559.1 $596.6

• (6.3)% Decrease

• (+) Underlying organic, M&A & Bookings

• (-) Snow fall volumes

Maintenance Services $416.2 $473.3

• (12.1)% Decrease

• (+) Underlying organic & M&A

• (-) Snow fall volumes

Development Services $143.6 $124.0

• 15.8% Increase

• (+) Strong project pipeline

• (-) Project schedule changes


“Strong-on-Strong” Acquisitions

$350M+Annualized revenue

2017 to 2020

2017

2018

2019

Anaheim, CA

Vista, CA

Sanford, FL

Dallas, TX

Danville, CA

Bay Area, CA

Austin, TX

Fort Lauderdale, FL

Phoenix, AZ

Hartford, CTTucson, AZ

Shamong, NJPortland, OR

Syracuse, NY

Mesa, AZ

San Diego, CA

2020

1Aquisitions realized in 2020 for the fiscal year-to-date as of 05/07/2020.

1

Napa, CA

Rock Hill, SC

Norcross, GA


Financial Review and OutlookJohn Feenan | EVP and Chief Financial Officer


2Q FY2020 Revenue


Total Revenue $559.1 $596.6

• (6.3)% Decrease

• (+) Underlying organic, M&A & Bookings

• (-) Snow

Maintenance - Land $313.7 $281.8• 11.3% Increase

• 1.9% underlying organic & $26.6M M&A

Maintenance - Snow $102.5 $191.5• (46.5)% Decrease

• Historically low snow fall volume

Maintenance Services $416.2 $473.3• (12.1%) Decrease

• Driven by lower snow fall volume

Development Services $143.6 $124.0• 15.8% Increase

• Strong project pipeline


2Q FY2020 Adjusted EBITDA

Maintenance Services Segment

Impacted by reduction in snow removal services revenues versus 2Q19

SG&A investments in growth and operational improvement initiatives remained on track

Development Services Segment

Strong bookings pipeline drove topline and Adjusted EBITDA growth versus 2Q19

Margin expansion driven by improved project efficiencies and cost containment


Total Adj. EBITDA $38.9 $61.1


• 7.0% Adjusted EBITDA margin

• 320 basis point contraction

Maintenance Services $41.2 $65.0



• 380 basis point contraction

Development Services $13.7 $11.0

• 24.5% Increase


• 60 basis point expansion

Corporate Expenses ($16.0) ($14.9)

• 7.4% Increase

• 2.9% of revenue

• 40 basis point increase


1H FY2020 Results

(Numbers $M) Revenue Adjusted EBITDA

1H20 1H19 1H20 1H19

Total BrightView $1,129.8 $1,122.7 $90.5 $111.2

Maintenance Services $835.1 $865.8 $88.9 $113.7

Development Services $296.4 $258.4 $32.8 $28.1

Corporate Expenses - - ($31.2) ($30.6)


$39.6$32.4

$3.0

$2.7

1H19 1H20

Capital Expenditures, Net Debt &

Adjusted Free Cash Flow

1 Net capital expenditures includes proceeds from sale of property & equipment. 2 Net Debt includes total long-term debt, net of original issue discount, and capital lease obligations net of cash and equivalents3 See the “Non-GAAP to GAAP Reconciliation” in the Appendix of this presentation for a reconciliation to the most directly comparable GAAP measure

Net CapEx / Total Revenue

3.5% at 1H19 vs. 2.9% at 1H20

Expect to be 2.5% to 3.0%

in FY 2020

Net Debt / Adjusted EBITDA

4.0x at 1H19 vs. 4.1x at 1H20

Focus on balancing liquidity needs

during COVID-19 pandemic

Adjusted Free Cash Flow

$25.1M at 1H19 vs. $53.5M at 1H20

Reduced Capital Expenditures and

Working Capital Commitments

Capital

Expenditures

Net Debt Adjusted

Free Cash Flow$1,174.1

$1,166.4

1H19 1H20

2

1

1

Asset Disposals

Maintaining a Conservative Utilization of Cash During the Pandemic

Net

Capex Net

Capex

$42.6

$35.1

1 $25.1

$53.3

1H19 1H20

3


Liquidity Update

Debt Maturities:

Receivables Financing Agreement

Maturity: February 2022

Revolving Credit Facility

Maturity: August 2023

Term Loan

Maturity: August 2025

$(M) As of

3/31/2020

Revolving Credit Facility $124.0

Receivables Financing Agreement 23.5

Total Credit Available 147.5

Cash and Cash Equivalents 88.0

Total Liquidity $235.5


Closing RemarksAndrew Masterman | President and Chief Executive Officer


Key Takeaways

Q2 Maintenance Land and Development Growth Strongest Since IPO

COVID-19 Impacting Near-Term Revenues, but Fundamentals of Business

and Industry Remain Strong

Continued Success Executing “Strong-on-Strong” M&A

Sales Opportunity Pipeline at its Highest Level in the Company’s History

Maintaining Strong Cash Position and Liquidity


Second Quarter Fiscal 2020 Earnings Call

QUESTIONS & ANSWERS

Appendix


Non-GAAP to GAAP Reconciliation

(*) Amounts may not total due to rounding.


Non-GAAP to GAAP Reconciliation (cont.)


Thank You

Investor Relations Contact:

John E. ShaveVP of Investor Relations

484.567.7148

[email protected]

Media Contact:

Fred JacobsVP of Communications & Public Affairs

484.567.7244

[email protected]

investor.brightview.com

mailto:[email protected]

mailto:[email protected]

second quarter fiscal 2020 earnings call · 5/7/2020 · relating to employees, wage and hour,...

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