Third Fiscal Quarter
Highlights
- Record revenues of $630.3 million for
the third fiscal quarter, up 0.4% from the prior year period: 2.9%
increase in Maintenance Services; 5.7% decline in Development
Services due to revenues from certain large projects in the prior
year.
- Revenues for the nine months ended June
30, 2018 increased 6.8% from the prior year period to $1,771.8
million.
- Net loss of $1.4 million for the third
fiscal quarter; Adjusted EBITDA of $97.8 million for the third
fiscal quarter; Adjusted Net Income of $33.2 million for the third
fiscal quarter.
- Net cash provided by operating
activities for the nine months ended June 30, 2018 of $123.7
million; Adjusted Free Cash Flow of $77.5 million, an increase of
$54.2 million over the nine months ended June 30, 2017 driven by
improvements in working capital management.
- Successfully completed the acquisition
of two landscape services companies in the third fiscal quarter
with combined annualized revenues of $73.2 million.
Initial Public Offering
- Successfully completed an IPO on July
2, 2018, generating net proceeds of approximately $501.2 million
for debt repayment.
BrightView Holdings, Inc. (NYSE: BV) (“BrightView” or the
“Company”) today reported results for the third fiscal quarter
ended June 30, 2018.
BrightView Chief Executive Officer, Andrew Masterman stated:
“Our third quarter was another strong period for us. We
successfully grew top-line revenue from the same period of 2017,
recognizing $630.3 million in revenues which is the highest revenue
generating quarter in our history, led by growth in our Maintenance
Services segment. We generated Adjusted EBITDA of $97.8 million
during the quarter and had a 15.5% Adjusted EBITDA Margin. We also
continue to execute on our ‘strong-on-strong’ acquisition strategy,
successfully acquiring two landscape service companies during the
quarter enabling us to further expand our business. Since the
quarter end we successfully completed our IPO, generating net
proceeds of $501.2 million. We are excited to embark on this new
chapter for the Company.”
Unless indicated otherwise, the information in this release has
been adjusted to give effect to a 2.33839-for-one reverse stock
split of the Company’s common stock effected on June 8, 2018.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
and Adjusted Free Cash Flow are not measures recognized under
generally accepted accounting principles (“GAAP”). Please see
“Non-GAAP Financial Measures” and “Reconciliation of GAAP to
Non-GAAP Financial Measures” below for more information.
Third Fiscal Quarter Results
For the third quarter of fiscal 2018, the Company’s consolidated
revenues increased 0.4% to $630.3 million compared to the same
period in 2017 due to 2.9% revenue growth within the Maintenance
Services segment primarily driven by incremental revenues from
businesses acquired of $26.1 million. Revenues from the Development
Services segment declined 5.7% compared to the same period last
year due to winding down production on certain large projects that
reached substantial completion during the quarter, coupled with the
timing of commencing work on new projects.
On a GAAP basis, net loss was $1.4 million, compared to net
income of $15.4 million for the third quarter of fiscal 2017,
primarily driven by an increase in equity-based compensation costs
incurred in connection with our IPO and other one-time IPO
expenses.
Adjusted EBITDA for the third fiscal quarter was $97.8 million,
compared to $98.5 million for the third quarter of fiscal 2017.
Adjusted Net Income was $33.2 million, compared to $35.2 million in
the 2017 period.
Net cash provided by operating activities for the nine months
ended June 30, 2018 was $123.7 million, compared to $69.0 million
for the same period last year. Adjusted Free Cash Flow for the nine
months ended June 30, 2018 was $77.5 million, an increase in cash
generation of $54.2 million over the same period last year. The
increases are reflective of improvements in working capital
management. For the nine months ended June 30, 2018, capital
expenditures were $71.7 million, compared with $51.0 million last
year, driven by the purchase of legacy ValleyCrest facilities for
$21.6 million in October 2017.
Recent Developments
On July 2, 2018, the Company completed an IPO in which it issued
and sold 24,495,000 shares of common stock at an offering price of
$22.00 per share, which generated net proceeds of approximately
$501.2 million after deducting underwriting discounts and
commissions and other offering expenses.
Proceeds from the IPO were used exclusively to pay down debt,
resulting in a total debt to Adjusted EBITDA leverage ratio
post-IPO of 4.0x, compared with 5.7x pre-IPO.
Conference Call Information
A conference call to discuss the third fiscal quarter 2018
financial results is scheduled for August 9, 2018, at 10 a.m.
Eastern Daylight Time. The U.S. toll free dial-in for the
conference call is 866-393-4306 and the international dial-in is
734-385-2616. The conference passcode is 3147928. 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 telephone replay will be available shortly after the broadcast
through Thursday, August 16, 2018, by dialing 800-585-8367 from the
U.S., and entering conference passcode 3147928. A replay of the
audio webcast also will be archived on the Company’s investor
website.
About BrightView
BrightView provides high-quality landscape services with an
unwavering commitment to client service. As the nation’s leading
commercial landscaping services company, BrightView’s 19,000 team
members provide services ranging from landscape maintenance and
enhancements to tree care and landscape development for thousands
of client properties, including corporate and commercial
properties, homeowners’ associations, public parks, hotels and
resorts, hospitals and other healthcare facilities, educational
institutions, restaurants and retail, and golf courses. BrightView
landscapes positively impact millions of lives every day.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934. These statements include, but are not limited
to, statements related to our expectations regarding the
performance of our industry, growth strategy, goals and
expectations concerning our market position, future operations,
margins, profitability, capital expenditures, liquidity and capital
resources and other financial and operating information. You can
identify these forward-looking statements by the use of words such
as “outlook,” “guidance,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the
negative version of these words or other comparable words. Such
forward-looking statements are subject to various risks,
uncertainties and factors, including general economic and financial
conditions; 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; 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; the impact of any adverse litigation judgments or
settlements resulting from legal proceedings relating to our
business operations; 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 or other external 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; and increases in interest rates increasing
the cost of servicing our substantial indebtedness. Additional
factors that could cause BrightView’s results to differ materially
from those described in the forward-looking statements can be found
under the heading entitled “Risk Factors” in our prospectus dated
June 27, 2018, filed with the Securities and Exchange Commission
(“SEC”) pursuant to Rule 424(b) of the Securities Act on June 29,
2018, as such factors may be updated from time to time in our
periodic filings with the SEC, including our quarterly report on
Form 10-Q for the quarterly period ended June 30, 2018, which are
accessible on the SEC’s website at www.sec.gov. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this release and in our filings with the SEC.
We undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
Non-GAAP Financial Measures
To supplement the Company’s financial information presented in
accordance with GAAP and aid understanding of the Company’s
business performance, the Company uses certain non-GAAP financial
measures, namely “Adjusted EBITDA”, “Adjusted EBITDA Margin”,
“Adjusted Net Income” and “Adjusted Free Cash Flow”. We believe
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and
Adjusted Free Cash Flow assist investors and in comparing our
results across reporting periods on a consistent basis by excluding
items that we do not believe are indicative of our core operating
performance. Management believes these non-GAAP financial measures
are useful to investors in highlighting trends in our operating
performance, while other measures can differ significantly
depending on long-term strategic decisions regarding capital
structure, the tax jurisdictions in which we operate and capital
investments. Management regularly uses these measures as tools in
evaluating our operating performance, financial performance and
liquidity, while other measures can differ significantly depending
on long-term strategic decisions regarding capital structure and
capital investments. Management uses Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted Net Income and Adjusted Free Cash Flow to
supplement comparable GAAP measures in the evaluation of the
effectiveness of our business strategies, to make budgeting
decisions, to establish discretionary annual incentive compensation
and to compare our performance against that of other peer companies
using similar measures. In addition, we believe that Adjusted
EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted
Free Cash Flow are frequently used by investors and other
interested parties in the evaluation of issuers, many of which also
present Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income and Adjusted Free Cash Flow when reporting their results in
an effort to facilitate an understanding of their operating and
financial results and liquidity. Management supplements GAAP
results with non-GAAP financial measures to provide a more complete
understanding of the factors and trends affecting the business than
GAAP results alone.
Adjusted EBITDA: We define Adjusted EBITDA as net income (loss)
before interest, taxes, depreciation and amortization, as further
adjusted to exclude certain non-cash, non-recurring and other
adjustment items.
Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as
Adjusted EBITDA, defined above, divided by Net Service
Revenues.
Adjusted Net Income: We define Adjusted Net Income as net income
(loss) including interest and depreciation, and excluding other
items used to calculate Adjusted EBITDA and further adjusted for
the tax effect of these exclusions and the removal of the discrete
tax items.
Adjusted Free Cash Flow: We define Adjusted Free Cash Flow as
cash flows from operating activities less capital expenditures, net
of proceeds from the sale of property and equipment, further
adjusted for the acquisition of certain legacy properties
associated with our acquired ValleyCrest business.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and
Adjusted Free Cash Flow are not recognized terms under GAAP and
should not be considered as an alternative to net income (loss) or
the ratio of net income (loss) to net revenue as a measure of
financial performance, cash flows provided by operating activities
as a measure of liquidity, or any other performance measure derived
in accordance with GAAP. Additionally, these measures are not
intended to be a measure of free cash flow available for
management’s discretionary use as they do not consider certain cash
requirements such as interest payments, tax payments and debt
service requirements. The presentations of these measures have
limitations as analytical tools and should not be considered in
isolation, or as a substitute for analysis of our results as
reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be
comparable to other similarly titled measures of other companies
and can differ significantly from company to company.
Please see “Reconciliation of GAAP to Non-GAAP Financial
Measures” below for reconciliations of non-GAAP financial measures
used in this release to their most directly comparable GAAP
financial measures.
BrightView Holdings, Inc.
Consolidated Balance Sheets
(In thousands, except par value
information)
June 30,
2018
September 30,
2017
(unaudited)
Assets Current assets: Cash and cash equivalents
$ 16,429 $ 12,779 Restricted cash 150 213 Accounts receivable, net
343,565 330,173 Unbilled revenue 102,305 88,907 Inventories 21,031
24,954 Other current assets 55,868 45,495 Total
current assets 539,348 502,521 Property and equipment, net 260,536
245,534 Intangible assets, net 305,287 371,271 Goodwill 1,772,222
1,703,773 Other assets 41,839 35,521 Total assets $
2,919,232 $ 2,858,620
Liabilities and Stockholders’ Equity
Current liabilities: Accounts payable $ 84,001 $ 76,133 Current
portion of long-term debt 14,600 14,600 Deferred revenue 76,665
58,221 Current portion of self-insurance reserves 38,019 56,079
Accrued expenses and other current liabilities 154,568
137,116 Total current liabilities 367,853 342,149 Long-term
debt, net 1,643,142 1,574,882 Deferred tax liabilities 72,513
125,139 Self-insurance reserves 80,791 66,519 Other liabilities
33,564 53,670 Total liabilities 2,197,863
2,162,359 Stockholders’ equity:
Common stock, $0.01 par value; 185,000
shares authorized; 77,895 and 77,083 shares issued and outstanding
as of June 30, 2018 and September 30, 2017, respectively
769 771 Additional paid-in-capital 912,027 894,089 Accumulated
deficit (178,688 ) (178,015 ) Accumulated other comprehensive loss
(12,739 ) (20,584 ) Total stockholders’ equity
721,369 696,261 Total liabilities and stockholders’ equity $
2,919,232 $ 2,858,620
BrightView Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2018 2017 2018
2017 Net service revenues $ 630,330 $ 627,490 $ 1,771,800 $
1,658,864 Cost of services provided 454,753 451,064
1,311,441 1,220,945 Gross profit 175,577 176,426
460,359 437,919 Selling, general and administrative expense 119,246
104,093 356,840 330,977 Amortization expense 29,247
31,250 89,611 94,800 Income from operations 27,084
41,083 13,908 12,142 Other income 265 343 1,284 1,320 Interest
expense 27,499 24,922 77,481 73,372
(Loss) income before income taxes (150 ) 16,504 (62,289 ) (59,910 )
Income tax (expense) benefit (1,247 ) (1,102 )
58,150 22,037 Net (loss) income $ (1,397 ) $ 15,402 $ (4,139
) $ (37,873 ) (Loss) earnings per share: Basic and Diluted $ (0.02
) $ 0.20 $ (0.05 ) $ (0.49 )
BrightView Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited) (In thousands)
Nine Months Ended
June 30,
2018 2017 Cash flows from operating
activities: Net loss $ (4,139 ) $ (37,873 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation 56,642 60,740 Amortization of intangible assets 89,611
94,800 Amortization of financing costs and original issue discount
8,080 7,512 Deferred taxes (57,837 ) (36,551 ) Equity-based
compensation 20,753 2,637 Hedge ineffectiveness and realized loss
7,338 12,468 Provision for doubtful accounts 1,137 2,752 Other
non-cash activities, net 2,281 (1,812 ) Change in operating assets
and liabilities: Accounts receivable (1,597 ) (15,671 ) Unbilled
and deferred revenue 4,219 (17,370 ) Inventories 4,290 8,096 Other
operating assets (11,073 ) (29,131 ) Accounts payable and other
operating liabilities 3,945 18,355 Net cash provided
by operating activities 123,650 68,952 Cash flows
from investing activities: Purchase of property and equipment
(71,743 ) (51,022 ) Proceeds from sale of property and equipment
3,946 5,327 Business acquisitions, net of cash acquired (104,377 )
(22,682 ) Other investing activities, net (403 )
2,498 Net cash used in investing activities (172,577 )
(65,879 ) Cash flows from financing activities: Repayments
of capital lease obligations (4,786 ) (2,572 ) Repayments of debt
(64,820 ) (164,222 ) Proceeds from receivables financing agreement
70,000 150,000 Proceeds from revolving credit facility 55,000 —
Repurchase of common stock (2,916 ) (2,419 ) Proceeds from issuance
of common stock 99 — Net cash provided by (used in)
financing activities 52,577 (19,213 ) Net change in
cash and cash equivalents 3,650 (16,140 ) Cash and cash
equivalents, beginning of period 12,779 35,697 Cash
and cash equivalents, end of period $ 16,429 $ 19,557
BrightView Holdings, Inc.
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In millions)
Three Months Ended
Nine Months Ended (In millions) June 30,
2018
June 30,
2017
June 30,
2018
June 30,
2017
Adjusted EBITDA Net (loss) income (1.4 ) 15.4 (4.1 ) (37.9 )
Plus: Interest expense, net 27.5 24.9 77.5 73.4 Income tax
provision (benefit) 1.2 1.1 (58.2 ) (22.0 ) Depreciation expense
17.8 19.9 56.6 60.7 Amortization expense 29.2 31.3 89.6 94.8
Establish public company financial
reporting compliance (a)
0.6 0.4 3.4 2.4
Business transformation and integration
costs (b)
2.5 2.6 21.4 10.8 Expenses related to initial public offering (c)
4.7 — 6.8 — Equity-based compensation (d) 15.0 2.2 20.8 2.6
Management fees (e) 0.7 0.6 2.1 2.0
Adjusted EBITDA $ 97.8 $ 98.5 $ 215.9 $ 186.8
Adjusted
Net Income Net (loss) income $ (1.4 ) $ 15.4 $ (4.1 ) $ (37.9 )
Plus: Amortization expense 29.2 31.3 89.6 94.8
Establish public company financial
reporting compliance (a)
0.6 0.4 3.4 2.4
Business transformation and integration
costs (b)
2.5 2.6 21.4 10.8 Expenses related to initial public offering (c)
4.7 — 6.8 — Equity-based compensation (d) 15.0 2.2 20.8 2.6
Management fees (e) 0.7 0.6 2.1 2.0 Income tax adjustment (f)
(18.1 ) (17.4 ) (85.8 ) (40.7 )
Adjusted Net Income $ 33.2 $ 35.2 $ 54.1 $ 34.0
Free Cash Flow and Adjusted Free Cash
Flow
Cash flows from operating activities $ 44.5 $ 0.2 $ 123.7 $ 69.0
Minus: Capital expenditures 27.6 18.6 71.7 51.0 Plus: Proceeds from
sale of property and equipment 2.4 2.9 3.9
5.3
Free Cash Flow $ 19.3 $ (15.5 ) $ 55.9 $ 23.3
Plus: ValleyCrest land and building acquisition (g) —
— 21.6 —
Adjusted Free Cash Flow $ 19.3 $
(15.5 ) $ 77.5 $ 23.3
BrightView Holdings, Inc.
Reconciliation of GAAP to Non-GAAP
Financial Measures
(In millions) (a) Represents costs incurred to
establish public company financial reporting compliance, including
costs to comply with the requirements of Sarbanes-Oxley and the
accelerated adoption of the new revenue recognition standard (ASC
606 – Revenue from Contracts with Customers), and other
miscellaneous costs. (b) Business transformation and
integration costs consist of (i) severance and related costs; (ii)
vehicle fleet rebranding costs; (iii) business integration costs
and (iv) information technology infrastructure transformation costs
and other.
Three Months
Ended Nine Months Ended (In millions) June
30,
2018
June 30,
2017
June 30,
2018
June 30,
2017
Severance and related costs $ 1.1 $ 0.4 $ 3.3 $ 6.1 Rebranding of
vehicle fleet 0.4 0.7 12.4 0.7 Business integration 0.2 0.2 0.4 0.4
IT infrastructure transformation and
other
0.8 1.4 5.3 3.6
Business transformation and integration
costs
$ 2.5 $ 2.6 $ 21.4 $ 10.8 (c) Represents expenses
incurred in connection with the IPO. (d) Represents
equity-based compensation expense recognized for stock plans
outstanding. (e) Represents management fees paid pursuant to
a monitoring agreement. (f) Represents the tax effect of
pre-tax items excluded from Adjusted Net Income and the removal of
the applicable discrete tax items, which collectively result in a
reduction of income tax. The tax effect of pre-tax items excluded
from Adjusted Net Income is computed using the statutory rate
related to the jurisdiction that was impacted by the adjustment
after taking into account the impact of permanent differences and
valuation allowances. Discrete tax items include changes in laws or
rates, changes in uncertain tax positions relating to prior years
and changes in valuation allowances. The nine months ended June 30,
2018 amount includes a $41.4 million benefit recognized as a result
of the reduction in the U.S. corporate income tax rate from 35% to
21% under the U.S. Tax Cuts and Jobs Act.
Three Months Ended Nine Months Ended
(in millions) June 30,
2018
June 30,
2017
June 30,
2018
June 30,
2017
Tax impact of pre-tax income
adjustments
$ 17.7 $ 17.5 $ 43.7 $ 40.8 Discrete tax items 0.4
(0.1 ) 42.1 (0.1 )
Income tax adjustment $
18.1 $ 17.4 $ 85.8 $ 40.7 (g) Represents the
acquisition of legacy ValleyCrest land and buildings in October
2017.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180808005772/en/
BrightView Holdings, Inc.Fred Jacobs, Vice President of
Communications & Public
Affairs484.567.7244Fred.Jacobs@BrightView.com
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