William Blair – 39th Annual Growth Stock Conference June 6, 2019
Inspiring people. Nurturing landscapes.
BrightView Holdings, Inc. (NYSE: BV) William Blair 39 th Annual - - PowerPoint PPT Presentation
BrightView Holdings, Inc. (NYSE: BV) William Blair 39 th Annual Growth Stock Conference June 6, 2019 Inspiring people. Nurturing landscapes. Disclaimer This presentation contains forward looking statements within the meaning of the
Inspiring people. Nurturing landscapes.
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This presentation contains “forward looking statements” within the meaning of the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, contained in this presentation, including statements concerning our plans, objectives, goals, beliefs, business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends and other information, may be forward-looking statements. The forward-looking statements are not historical facts, or guarantees
many of which, by their nature, are inherently uncertain and beyond our control. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable
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 speak only as of the date of this presentation, and we undertake no obligation to publicly update or review any forward- looking statement, whether as a result of new information, future developments or otherwise. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this presentation. Such risks, uncertainties and
under the heading “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere on our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”)
predict all risk factors and uncertainties. For a more complete description of risks and other uncertainties, please to refer to our Annual Report on Form 10-K as well as to our subsequent filings with the SEC. Included in this presentation are certain non-GAAP financial measures, such as Adjusted EBITDA, designed to supplement, and not substitute, the Company’s financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”) because management believes such measures are useful to investors. Additional information about these measures and a reconciliation to the nearest GAAP financial measures is provided in the appendix to this presentation. We are not providing a quantitative reconciliation of our financial outlook for Adjusted EBITDA to net income (loss), its corresponding GAAP measure, because the GAAP measure that we exclude from our non-GAAP financial outlook is difficult to reliably predict or estimate without unreasonable effort due to its dependence on future uncertainties. Additionally, information that is currently not available to us could have a potentially unpredictable and potentially significant impact on our future GAAP financial results.
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company to a public offering in 2014
from the University of North Carolina, Chapel Hill
John Feenan, Executive VP and Chief Financial Officer
and Structural Casting divisions
North America for ESAB Group
advanced degrees in Engineering, Japanese and Business Administration from the University of Michigan
Andrew Masterman, President and Chief Executive Officer
Cedars-Sinai Medical Center – Los Angeles, CA Inspiring people. Nurturing landscapes.
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removal services
development services
Founded in 2014 Industry-Defining, Route-Based Services Company Strong Local Market Presence and Brand Reputation Large, Highly- Fragmented and Stable Addressable Market Consolidation Strategy Leveraging Resources and Scale Operational Improvements Driving Strong Margins
1 FY2018 results represent operations during the 12ME 9/30/18.
FY’18 Revenue $2.35B1 Revenues: $1.77B1 75% of Revenues Revenues: $0.58B1 25% of Revenues Business Overview & Highlights
services for new landscapes / large-scale redesign projects
upon project completion
Selected Services
Landscape Services Snow Services Tree Care Services Sweep Services Irrigation Fertilization Disaster Recovery Landscape Architecture Nursery & Tree Moving Pool & Water Sports Fields
Selected Customers
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Commercial Landscaping
model
services Snow Removal
modulated around 30-year avg. snowfall rates
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Local Market Presence
Deep local market knowledge “Strategic partnership” mentality Professional, empowered and accountable branch managers Differentiated training and retention of branch staff Consistent, high-quality execution Lower organizational sophistication Lower consistency of service and quality Higher employee / crew turnover
Breadth of Service Offerings
Able to serve virtually any customer need Expertise in highly technical and complex services Deep horticultural knowledge base Ability to self-perform majority of work Mostly offering basic services Lacking in depth / horticultural expertise Customers forced to manage multiple
vendors Professional Operating Platform
Highly trained, collegiate and masters graduates with deep
horticultural knowledge base and field experience
Best-in-class technology and equipment Comprehensive compliance and safety management programs Sophisticated centralized ERP systems Smaller scale limits resources to invest in
advanced technological infrastructure
Less developed Human Resources policies
and practices
Limited employee career opportunities
National Scale
Fully invested, national platform capable of serving customers
across multiple geographies while executing locally
Institutionalized best-practices Escalation path for local issues to drive collaborative solutions Significant resources to support local branch operations Inability to deliver services nationally Informal or inexistent process for sharing
and implementation of best-practices
Limited resources dedicated to support and
foster employee development Average Local Competitor
13 companies and more than $250 million in revenue acquired since 1/1/17
States with BrightView Branches Extended Coverage via Qualified Service Partners Maintenance Location Development Location
Branches Employees Evergreen ~65% ~75% Seasonal ~35% ~25% Total > 200 ~ 20,000
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Pavilion Park Irvine, CA Beacon Park Irvine, CA Marlins Park Miami, FL ExxonMobil Headquarters Irving, TX Getty Museum Los Angeles, CA Duke University Durham, NC Four Seasons Hualalai Kona, HI Ritz Carlton Key Biscayne, FL Colonial Williamsburg Williamsburg, VA
Toyota North American Headquarters – Plano, TX
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Infrastructure and Technology in place to expand existing relationships
Capitalize on Multiple Channels to win new business
Center of Excellence initiatives driving meaningful cost reduction
Commitment to implementing our proven “Strong-on-Strong” strategy
~10x The Size of Next Largest Direct Competitor Industry Leader Across a Number of Service Lines Differentiated Scale in a Highly- Fragmented Market
Serves 4 of the 5 Largest U.S. Banks4 Contracts with 4 of the 5 Largest U.S. Companies5 Serves 9 of the Top 10 3rd Party Hotel Management Firms Serves 11 of the Top 15 Health Systems
Scope to Service a Diverse Set of End Markets
~13,000 Office Buildings / Corporate Campuses 9,000 Residential Communities ~3,400 Shopping Environments 450+ Education Institutions
High-Profile Bespoke Assignments
Turf Restoration for the National Mall Maintenance for Colonial Williamsburg Official Field Consultant for Major League Baseball Designed / Built Fields for 3 Olympic Games #1 Commercial Landscaper in the U.S. #1 Snow Removal Company in the U.S.2 Leading Tree Nursery3 Leading Provider of Golf Course Maintenance3 Leading Water Irrigation Service Provider3
Top 10 North American Landscaping Companies1
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~10x
1 Per Lawn and Landscape magazine and company press releases, based on 2017 revenue. Excludes tree care focused companies. 2 Per Snow Magazine. 3 Per Management estimates. 4 Ranking based on total publicly reported assets. 5 Per Forbes, based on total revenues.
1 Landscaping services in the U.S. (2006-2017), IBISWorld – Snowplowing Services in the U.S. (2014, 2016-2017) presents commercial landscaping services and commercial
snowplowing services as a share of the overall U.S. market at rates consistent with IBISWorld figures for 2017.
service
centralization trends
criticality of execution
U.S. Commercial Landscaping and Snow
BrightView: ~$1.77B Market Share: 2.7%
U.S. Commercial Landscaping Services
MARKET OPPORTUNITY
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$46 $48 $47 $44 $45 $46 $50 $53 $58 $61 $65 $65 $67 $68 $69 $69 $70 $71 '06A '07A '08A '09A '10A '11A '12A '13A '14A '15A '16A '17A '18E '19E '20E '21E '22E '23E CAGR: 0%
$5.57 $5.32 $2.14 $2.15 $1.68 $0.58 $0.24
Fixed Taxes Utilities R&M Cleaning Parking Grounds
Recurring Maintenance Services
Anchor business that provides predictable recurring revenue and high degree of visibility on future performance (75% of FY2018 revenue)
Evergreen Sites
Significant presence in evergreen regions, which require year-round maintenance
Limited Customer Concentration¹
12% 88% Top 10 Customers All Other Customers
1 Reflects BrightView’s customer concentration based upon FY2018 revenue contribution. 2 Other includes: Hospitality, Hospitals, Education, Public Spaces and Other sectors. 3 Building Owners and Managers Association International estimate of 2018 average operating expenses per square foot.
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Nature
No Customer >3%
40% 25% 35%
Other 2 HOA Corporate
Diversified Customer Base1
minimums (reduce year-to-year volatility) and upside from pay-per-plow contracts
demand U.S. Snowfall Amounts Modulate Around 10- and 30-Year Averages¹
1 Reflects cumulative annual snowfall at locations where BrightView has a presence. 2019 is fiscal year to date.
10-Yr. 2,741” 30-Yr. 2,590” 15
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Additional customer sites
Annualized revenue since Jan 1, 2017
Note: Quarters represent BrightView’s fiscal quarters for FYE 30-Sep. Anaheim, CA Vista, CA Sanford, FL Dallas, TX Danville, CA Bay Area, CA Austin, TX South Florida Phoenix, AZ Hartford, CT Tucson, AZ Shamong, NJ Portland, OR
Increase Density Develop Underpenetrated Geographies Expand Landscape Enhancement Business Improve Technical Capabilities
Andrew Masterman
President and Chief Executive Officer
John Feenan
EVP, Chief Financial Officer
Jeff Herold
President, Landscape Maintenance
Tom Donnelly
President, Landscape Development
Brian Bruce
EVP, Chief Information Officer
Todd Chambers
EVP, Chief Marketing Officer
Jonathan Gottsegen
EVP, Chief Legal Officer
Senior Leadership Team
Position Number of Employees
Tenure (yrs.)¹ Senior Vice President 15 19 Vice President 35 17 General Manager 12 16 Branch Manager 208 13 Assistant Branch Manager 62 11 Account Manager 724 8
1 As of 9/30/18 and including tenure with companies acquired by BrightView.
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Local Leadership Team
Los Angeles County Museum of Art – Los Angeles, CA
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∆ YoY
∆ YoY (bps)
∆ YoY
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1Our financial guidance contains forward-looking statements and is subject to risks and uncertainties. See “Introductory Information”.
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(Numbers $M)
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(Numbers $M)
prior-year quarter
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Net CapEx / Total Revenue: 1.8% in 1H18 vs. 3.5% in 1H19 Expect Full-Year Fiscal 2019 around 2.5% Net Debt / Adjusted EBITDA 4.1x at 1Q19 vs. 4.0x at 2Q19 Expect to be around 3.5x at FYE ’19
$1,161.4 $1,174.1
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$21.0
Net Capex
$39.6
Net Capex
$1.5 $3.0
1H18 1H19
$44.1 $42.6 $21.6
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Asset Disposals
1 Net capital expenditures excludes the acquisition of legacy ValleyCrest land and buildings for $21.6mm in 1Q18 and is net of proceeds from sale of property & equipment. 2Total Financial Debt includes total long-term debt, net of original issue discount, and capital lease obligations 3Total Net Financial Debt (“Net Debt”) equals Total Financial Debt minus Total Cash & Equivalents
Legacy Assets
(Numbers $M)
Rose Fitzgerald Kennedy Greenway – Boston, MA
Agnes Scott College – Atlanta, GA
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(*) Amounts may not total due to rounding.
(in millions)* 2019 2018 2019 2018
Adjusted EBITDA Net loss (3.6) $ (22.1) $ (12.4) $ (2.7) $ Plus: Interest expense, net 18.9 25.1 36.1 50.0 Income tax benefit (1.3) (7.9) (4.5) (59.4) Depreciation expense 21.7 17.7 41.0 38.8 Amortization expense 13.8 29.3 28.9 60.4 Establish public company financial reporting compliance (a) 1.3 0.2 1.7 2.8 Business transformation and integration costs (b) 4.7 2.1 8.9 18.9 Expenses related to initial public offering (c) — 2.1 — 2.1 Equity-based compensation (d) 5.6 4.3 11.5 5.8 Management fees (e) — 0.7 — 1.3 Adjusted EBITDA 61.1 $ 51.6 $ 111.2 $ 118.0 $
Six Months Ended March 31, Three Months Ended March 31,
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(*) Amounts may not total due to rounding.
(in millions)* 2019 2018 2019 2018
Adjusted Net Income Net loss (3.6) $ (22.1) $ (12.4) $ (2.7) $ Plus: Amortization expense 13.8 29.3 28.9 60.4 Establish public company financial reporting compliance (a) 1.3 0.2 1.7 2.8 Business transformation and integration costs (b) 4.7 2.1 8.9 18.9 Expenses related to initial public offering (c) — 2.1 — 2.1 Equity-based compensation (d) 5.6 4.3 11.5 5.8 Management fees (e) — 0.7 — 1.3 Income tax adjustment (f) (6.2) (9.1) (12.6) (67.7) Adjusted Net Income 15.6 $ 7.6 $ 26.0 $ 21.0 $ Free Cash Flow and Adjusted Free Cash Flow Cash flows from operating activities 58.3 $ (3.3) $ 64.7 $ 79.2 $ Minus: Capital expenditures 25.3 14.3 42.6 44.1 Plus: Proceeds from sale of property and equipment 1.2 0.8 3.0 1.5 Free Cash Flow 34.2 $ (16.8) $ 25.1 $ 36.6 $ Plus: ValleyCrest land and building acquisition (g) — — — 21.6 Adjusted Free Cash Flow 34.2 $ (16.8) $ 25.1 $ 58.2 $
Six Months Ended March 31, Three Months Ended March 31,
(*) Amounts may not total due to rounding.
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(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 (ASU 2014-09 – 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. (c) Represents expenses incurred for the IPO. (d) Represents equity-based compensation expense recognized for equity incentive plans outstanding, including $3.1 and $7.0 million related to the IPO in the three and six months ended March 31, 2019, respectively. (e) Represents fees paid pursuant to a monitoring agreement terminated on July 2, 2018 in connection with the completion of our IPO. (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 six months ended March 31, 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 Tax Act. (g) Represents the acquisition of legacy ValleyCrest land and buildings in October 2017.
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(*) Amounts may not total due to rounding.
Three Months Ended September 30, Twelve Months Ended September 30, (in millions)* 2018 2017 2018 2017
Adjusted EBITDA Net loss $ (10.9 ) $ 0.4 $ (15.1 ) $ (37.4 ) Plus: Interest expense, net 20.3 24.7 97.8 98.1 Income tax benefit (8.1 ) (2.0 ) (66.2 ) (24.0 ) Depreciation expense 18.7 17.0 75.3 77.7 Amortization expense 15.3 31.0 104.9 125.8 Establish public company financial reporting compliance (a) 0.8 — 4.1 2.3 Business transformation and integration costs (b) 4.0 7.9 25.4 18.7 Expenses related to initial public offering (c) — — 6.8 — Debt extinguishment (d) 25.1 — 25.1 — Equity-based compensation (e) 8.0 0.3 28.8 2.9 Management fees (f) 11.0 0.6 13.1 2.6 Adjusted EBITDA $ 84.2 $ 79.7 $ 300.1 $ 266.6
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(*) Amounts may not total due to rounding.
Three Months Ended September 30, Twelve Months Ended September 30, (in millions)* 2018 2017 2018 2017
Adjusted Net Income Net loss $ (10.9 ) $ 0.4 (15.1 ) $ (37.4 ) Plus: Amortization expense 15.3 31.0 104.9 125.8 Establish public company financial reporting compliance (a) 0.8 — 4.1 2.3 Business transformation and integration costs (b) 4.0 7.9 25.4 18.7 Expenses related to initial public offering (c) — — 6.8 — Debt extinguishment (d) 25.1 — 25.1 — Equity-based compensation (e) 8.0 0.3 28.8 2.9 Management fees (f) 11.0 0.6 13.1 2.6 Income tax adjustment (g) (17.5 ) (16.0 ) (103.1 ) (56.7 ) Adjusted Net Income $ 35.8 $ 24.2 $ 90.0 $ 58.1 Free Cash Flow and Adjusted Free Cash Flow Cash flows from operating activities $ 56.7 $ 55.3 $ 180.4 $ 124.2 Minus: Capital expenditures 14.7 9.9 86.4 60.9 Plus: Proceeds from sale of property and equipment 8.0 1.7 12.0 7.0 Free Cash Flow $ 50.1 $ 47.1 $ 105.9 $ 70.4 Plus: ValleyCrest land and building acquisition (h) — — 21.6 — Adjusted Free Cash Flow $ 50.1 $ 47.1 $ 127.6 $ 70.4
31 (*) Amounts may not total due to rounding.
(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 September 30, Twelve Months Ended September 30, (in millions)* 2018 2017 2018 2017
Severance and related costs $ 2.5 $ 0.8 $ 5.7 $ 6.9 Rebranding of vehicle fleet 0.1 5.6 12.5 6.3 Business integration 1.3 — 1.7 0.6 IT Infrastructure transformation and other 0.1 1.5 5.5 4.9 Business transformation and integration costs $ 4.0 $ 7.9 $ 25.4 $ 18.7
(c) Represents expenses incurred in connection with the IPO. (d) Represents losses on the extinguishment of debt. (e) Represents equity-based compensation expense recognized for equity incentive plans outstanding, including $19.6 million related to the IPO in the twelve months ended September 30, 2018. (f) Represents fees paid pursuant to a monitoring agreement terminated on July 2, 2018 in connection with the completion of the IPO. (g) 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 twelve months ended September 30, 2018 amount includes a $43.4 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 September 30, Twelve Months Ended September 30, (in millions)* 2018 2017 2018 2017
Tax impact of pre-tax income adjustments $ 16.1 $ 14.3 $ 59.6 $ 55.3 Discrete tax items 1.4 1.7 43.5 1.4 Income tax adjustment $ 17.5 $ 16.0 $ 103.1 $ 56.7
(h) Represents the acquisition of legacy ValleyCrest land and buildings in October 2017.
Investor Relations Contact: Daniel Schleiniger
VP, Investor Relations 484.567.7148 Daniel.Schleiniger@BrightView.com
Media Contact: Fred Jacobs
VP, Communications & Public Affairs 484.567.7244 Fred.Jacobs@BrightView.com
BrightView Holdings, Inc. investor.brightview.com