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BrightView Holdings Inc (NYSE:BV)
Q2 2019 Earnings Call
May. 8, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to BrightView's Second Quarter of Fiscal 2019 Earnings Conference Call. As a reminder, this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. (Operator Instructions).

The earnings press release is available on the company's website, investor.brightview.com. Additionally, the online webcast includes the presentation slides that will be referred as part of today's discussion, and a downloadable copy is also available online.

I will now turn the call over to Dan Schleiniger, BrightView's Vice President of Investor Relations. Please go ahead.

Daniel Schleiniger -- Vice President of Investor Relations

Thank you operator. Just a quick question. We hear a phone ringing on our side, do you hear it? Just want to make sure it's not going out the room.

Operator -- Vice President of Investor Relations

Yes, we do hear it.

Daniel Schleiniger -- Vice President of Investor Relations

Okay, let's wait maybe for that to stop. Apologies for this, let's just give it a second. Hello, Michelle?

Operator -- Vice President of Investor Relations

Yes.

Daniel Schleiniger -- Vice President of Investor Relations

Here we are -- did that ringing stops after we dropped off?

Operator -- Vice President of Investor Relations

It stopped now, yes.

Daniel Schleiniger -- Vice President of Investor Relations

Okay great. Okay, so apologies for that. I guess we'll -- can we get started?

Operator -- Vice President of Investor Relations

Sure. Do you want me to go ahead and read the intro again or you want to just go ahead.

Daniel Schleiniger -- Vice President of Investor Relations

I assume everybody started it. So I'll just say good morning to everyone. And I'm joined today on today's call by Andrew Masterman, our Chief Executive Officer; and John Feenan, our Chief Financial Officer.

Before we begin, I'd want to remind listeners that some of the comments made today, including responses to questions and information reflected in the presentation slides will be forward-looking and actual results may differ materially from those projected. Please refer to the company's recent SEC filings for more detail on the risks and uncertainties that could impact the company's future operating results and financial condition.

Our comments today will also include a discussion of certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures are contained in the earnings release on the company's website. Disclaimers on forward-looking statements and non-GAAP financial measures apply both to today's prepared remarks as well as the Q&A.

Finally, unless otherwise stated, all references to quarterly year-to-date or annual results or periods refer to our fiscal years ending September 30th in each respective year. Today, we're presenting the results for the three and six month period ended March 31st, 2019.

So with that I'll turn the call over to BrightView CEO, Andrew Masterman, who will provide you an overview of our recent results, business strategy and future outlook.

Andrew Masterman -- President and Chief Executive Officer

Thanks, Dan. Good morning everyone, and thank you for joining us on today's call.

Please turn to Slide 4. Today, we are going to take you through strong results for the second quarter of fiscal 2019 as well as provide you with an outlook for a green season in the second half of the year.

Before John and I, take you through some of the details there are a couple of business dynamics that I'd like to highlight this morning. First, with respect to our business, a strong operating performance in the second quarter speaks to the strategic decisions we've made over the last couple of years. We've streamlined our costs and refocused the company on generating long-term profitable growth by leveraging our national scale, while localizing other important business drivers. We believe that these decisions are just beginning to bear fruit.

One of the clear benefits of having a nationwide presence is the balanced effect that it provides when we experience unusual swings in weather patterns. Since we do substantially all of our work outside, weather can impact our results from quarter-to-quarter. With that said, our second quarter performance demonstrates that these patterns tend to normalize over longer periods and across large geographies. That's an important point for me to make. We operate across a national footprint, despite a 33% year-over-year decline and the usually very strong snowfall in the northeast region, our snow removal revenue was modestly positive versus prior year. This was aided by snowfall increases in the mid-Atlantic, Colorado and Pacific Northwest markets, which illustrates the balanced effect I just alluded to.

With our snow season largely behind us and as we enter the green period of our third and fourth quarters, we are seeing positive returns on the investments we made over the last couple of years to redesign and revitalize our sales team. Net new sales momentum remains solid through the selling season for our maintenance services segment, which also saw positive trends in the underlying business that I will touch on in a few minutes. And the development services segment bookings will ensure strong spring and summer activity for the business, which supports our plan to deliver positive revenue growth in this segment for the full-year. In other words, we remain confident in our full-year plan and are maintaining our full-year fiscal 2019 guidance.

To help guide our future strategy and further support our stockholders, a few weeks ago we mentioned that our Board of Directors expanded to eight members with the appointment of two new Independent members. I would like to take a moment to welcome Jane Okun Bomba and Mara Swan to our Board. Both Jane and Mara bring a wealth of executive level leadership, experience, and expertise from across a broad spectrum of industries. Half of our Board now consists of Independent Directors, and I believe I speak for the rest of the members in saying that I'm excited to work with Jane and Mara for the benefit of all BrightView stockholders.

Turning now to the second quarter on slide 5. Total revenue grew 1.1% in the quarter, with revenue growth in maintenance partially offset by a decline in the development segment revenue. The maintenance segment delivered revenue growth of 2.9% versus last year, including 4.4% increase in our landscape maintenance revenue. Importantly, the underlying growth in the commercial landscaping revenue improved over the course of the quarter turning net positive in March. In fact, maintenance contract revenue grew versus last year but some markets particularly Southern California experienced delays in the installation of enhancements due to the continued wet weather in that part of the country.

Included in our maintenance segment second quarter revenue is a $9.4 million headwind from our strategic managed exit initiative. This brings the total revenue impact for managed exits to $20.2 million dollars for the first six months of fiscal 2019. And as we have consistently mentioned, we implemented this initiative to optimize our customer portfolio, focus our account managers on delivering extraordinary customer service, and ultimately to enhance our profitability.

We have now concluded all of the customer negotiations associated with this targeted management exit initiative. And with that we can confirm that the third quarter fiscal revenue will include an impact from managed exits of less than $9 million. Beyond the third quarter, where there is a tail to the program, the managed exit revenue impact will decline compared to the prior four quarters. That tail which runs into early fiscal 2020 will be less than total of $8 million.

As I mentioned earlier, our snow removal revenue benefit from our nationwide presence and was relatively flat in our existing footprint versus the prior year. Total snow removal revenue was modestly positive, thanks to a small contribution from acquisitions. Speaking of acquisitions, the quarter included $24.2 million of acquired revenue, with more than half of that figure coming from the wraparound contribution of 2018 M&A activity.

As we reported in our first quarter call, we completed two acquisitions during the second quarter of 2019. Our acquisition of Emerald Landscape in January combined with the earlier acquisitions of Cleary and Marina, gives us more than 20 branches in Northern California alone. And we have doubled our branch network in Texas over the last couple of years, thanks to our acquisition of Benchmark Landscapes in February, in addition to our earlier Groundskeeper and Precision transactions. We are focused on supporting the integration of both companies and are pleased with the organic growth trends we are seeing in some of those markets.

Our realized revenue target for 2019 from acquisitions is in good shape as a result of these early transactions and we will continue to be selective by following our strong, strong M&A strategy, working through a robust pipeline to potentially enhance this year's result and also build next year's wraparound contribution.

In the development segment, new projects early in the calendar year partly offset comparisons with certain large projects from prior year period. We also face particularly wet weather in January and February, with nearly half of the working days in the quarter suffering at least a partial impact from weather in some important markets. As a result, the development segments revenue in the second quarter declined 5.4% versus the prior year. However as I just mentioned based on our bookings for the second half of 2019, we expect to deliver full year positive revenue growth in the segment.

In terms of profitability on Slide 6, we generated some of our best ever adjusted EBITDA results in both absolute dollars as well as margin for the March quarter. Adjusted EBITDA in the quarter was $61.1 million, up 18.4% versus last year. Adjusted EBITDA margin expanded by 150 basis points to 10.2%, supported by the strong performance of our maintenance segment, the benefit of existing low profitability -- of exiting low profitability accounts and managing lower corporate expenses. So I'll say it again, this result is a testament to our deliberate approach to profitable growth. By localizing our sales teams and focusing our account managers on the right customer relationships, we are optimizing our resources and capturing efficiencies while delivering unmatched service to our customers.

On Slide 7, I'd like to highlight some of the steps we're taking to drive future top line growth, support customer retention, and enhance our operational efficiency. As a leader in the industry, we are continuing to implement digital tools to support our teams. Last month, we began the rollout of the salesforce software to enhance our field teams CRM capabilities. We're also about halfway through the deployment of electronic time capture in our development segment, after completing the deployment in the maintenance segment last year. Although we're still in the early stages of the digitization of our business, we are confident that these tools will help our branches strengthen customer relationships and further build on the industry standard operational efficiency.

Additionally, you may have noticed that this morning's earnings release was issued from Blue Bell, Pennsylvania. As of last week, we moved into new office space less than three miles up the road from our previous headquarters in Plymouth Meeting, Pennsylvania. Not only is this a cost efficient solution for consolidating various corporate work groups from across the country, but the new facility also allows us to establish the BrightView national training center. In this new location, we will now be able to offer an expanded curriculum taught by both internal and external experts to continue developing our future leaders. Each year we expect to provide training and education to over 400 of our field personnel leadership teams and other high potential employees. Our national training center will offer courses across a number of topics designed to drive incremental sales, engage our customers, and develop leadership skills. BrightView is not just a benchmark within the commercial landscaping industry, but across the services sector in general.

Finally, I like to mention a couple of important developments for our company on Slide 8. Next week, BrightView and National Park Service will unveil a new landscape created by our maintenance segment team at Philadelphia's Independence National Historical Park. Independence Park is home to Independence Hall and the Liberty Bell, which makes it one of the country's most popular tourist attractions. As the nation's landscaper, we're honored that BrightView was able to contribute to the restoration of this beautiful and historically important site for future visitors to explore.

I'm also proud to report, we have formalized another important and long-standing relationship for BrightView. Our Sports Turf division has been named Major League Baseball's official field consultant. I'd like to congratulate Murray Cook, President of the Sports Turf division and his team for this important recognition. Speaks to the quality and breadth of services that BrightView delivers to all of its customers.

I'll now turn the call over to John, who'll discuss our financial performance in greater detail.

John Feenan -- Executive Vice President, Chief Financial Officer

Thanks Andrew, Good morning to everyone. As you can see on Slide 10, we are maintaining our guidance for fiscal 2019, I should reiterate that we provide annual guidance and we manage BrightView with a long term view with respect to both growth and profitability. Just as it was when we first shared our guidance ranges with you in November of last year, our confidence level in our full-year fiscal 2019 outlook remains high. With the recent start of the green season, I'm encouraged by the trends we are seeing in our business.

Net new sales in maintenance remain strong through the bulk of the selling season. Our base contract business grew in the quarter and our underlying commercial landscaping revenue turned positive in the month of March. And despite the current tight labor markets, over the last couple of months, we've hired more than 5,000 people as part of the seasonal flexing of our workforce to prepare for the busy third and fourth quarters of our fiscal year.

Our development teams book of business for the second half of the year should deliver strong top line growth to offset the seasonal decline experienced in the first half of the year. We expect full-year revenue in the development segment to grow versus last year. With that we are keeping our revenue and EBITDA guidance ranges unchanged.

In terms of the other elements of our guidance. Our net capital expenditures should be around 2.5% of total revenue for the year. The percentage was higher at the beginning of the year as we wanted to make sure our teams had the equipment they needed for the green season. The acquisitions we've made so far this year added to the wraparound from last year's M&A activity, should deliver at least $75 million in additional revenue to our 2019 result. Adjusted EBITDA margin expansion of 10 basis points to 30 basis points versus fiscal 2018 may be on the low end of the range, as we are expecting a larger contribution from the development segment in the second half of 2019. And we expect the bulk of our cash generation for the balance of the year to go to debt reduction. That combined with our higher targeted adjusted EBITDA should reduce our leverage ratio below the year end level with a clear path to move below three times within the next couple of years.

Let's move now to our financial results on Slide 11. For the second quarter of fiscal 2019, BrightView's total revenue was $596.6 million, up 1.1% versus the prior year quarter. Revenue increased in our maintenance segment, with a partial offset from the decline in revenue in our development segment. Adjusted EBITDA grew 18.4% to $61.1 million, including margin expansion of 150 basis points versus the prior year quarter. This strong performance was underpinned by very good results in our maintenance segment.

During the quarter, the maintenance segment benefited from relatively steady year-over-year results in the snow removal business and perhaps counterintuitively from lower labor usage in our contracted landscape business, due to the adverse weather conditions in some geographies. Profitability, in the maintenance segment also improved partly due to our managed exit initiative, demonstrating that this was the appropriate strategy to pursue. By driving profitable growth and delivering higher quality earnings, we believe we are taking the right approach to generating long-term stockholder value.

Corporate expenses were also lower versus the prior year, due to the timing of certain payments, the change in our fiscal year end from December to September, and a continued focus on efficiency initiatives. These improvements were partly offset by a decline in profitability in the development segment, largely due to a challenging comparison with certain large projects during the prior year. This led to lower top line and some margin compression, which we expect to offset with stronger performance in the second half of the year, given our current book of business.

As you can see on Slide 12, our first half results reflect the impact of our challenging first quarter partly offset by solid second quarter performance. Based on our visibility into the key drivers of our business, we see a stronger second half performance in both of our operating segments.

Moving now to our balance sheet and capital allocation on Slide 13, capital expenditures totaled $42.6 million in the first half of fiscal 2019, down from $44.1 million in the prior year period. Excluding the legacy asset acquisitions from the first quarter of fiscal 2018 and adding back the proceeds from the sale of property and equipment in each period, total net capital expenditures as a percentage of revenue was 3.5% in the first half of fiscal '19, up from 1.8% in the prior year period, due to the timing of some equipment purchases versus last year. As I mentioned earlier we continue to expect net capital expenditures for the full fiscal year to be around 2.5% of revenue. Our leverage ratio was 4 times at the end of the second quarter of fiscal 2019 versus 4.1 times at the end of the first quarter of the year.

Moving to Slide 14, we are running BrightView to deliver long term stable and predictable growth, but it's important to understand that our business is subject to short term seasonal effects that can impact our results from quarter-to-quarter. The underlying trends in our maintenance segment point to a solid second half performance. And as I mentioned earlier, we expect to see greater contribution from our development segment in the second half.

We are now in the part of the year where we have greater visibility into the core success factors of our business. I'm confident that we will deliver consolidated results within our guidance ranges for the full fiscal year. Most importantly, we are well-positioned to continue generating significant free cash flows to support our M&A strategy and reduce our debt. And we remain focused on creating value for BrightView stockholders by pursuing strategies that will benefit our business in the long term.

With that, let me turn the call back over to Andrew.

Andrew Masterman -- President and Chief Executive Officer

Thank you John. Turning now to Slide 16, the operating results that we just presented were among BrightView's best ever for March quarter. More importantly our top line and cash generation indicators going into the second half of the fiscal year are supportive of our full-year outlook. Net new sales in our maintenance segment remains strong through the selling season and we grew our base contract business during the second quarter.

In our development segment, the team produced a book of business that will keep them very busy through the spring and summer months. Our recently acquired companies are in the process of being integrated into BrightView and are contributing solid results so far. Moving forward the M&A pipeline remains attractive, with some compelling opportunities to continue making strong on strong acquisitions for years to come. We have a largely predictable and cyclically resilient business over the long term, with significant opportunities to continue growing both through our existing footprint as well as through further consolidation of the top quartile operators in the nation's commercial landscaping industry.

When we look back at our first four reported quarters as a public company, we are pleased with the underlying results of our business. More importantly, we see a favorable operating environment moving forward and expect to continue demonstrating the benefits of our scale and strategic approach to generating consistent long term growth.

Our ultimate goal is to generate stockholder value by having our existing and potential new customers view BrightView as the choice for maintaining and developing their most important living assets. To achieve our goal, we will continue to be the most professional, reliable, sophisticated and highest quality landscaping company in the world.

Thank you for your attention this morning. And we'll now open the call for your questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Your first question comes from Judah Sokel from JPMorgan. Your line is open.

Judah Sokel -- JPMorgan -- Analyst

Hi, Good morning. How are you?

Andrew Masterman -- President and Chief Executive Officer

Fine, Judah.

Judah Sokel -- JPMorgan -- Analyst

At first, it was obviously encouraging to see the full year guidance reiterated. I was wondering if you could help us bridge from last quarter to this quarter, if any of the components of that guidance especially on the revenue side changed? In particular, we're focused on M&A if your embedded guidance, embedded assumption for M&A changed at all and obviously, the Cleary (ph) would be on the organic side as well. Thank you.

Andrew Masterman -- President and Chief Executive Officer

Yeah Judah, as we look at the rest of the year obviously we've not made any further acquisitions since we posted the acquisition of the Benchmark and Emerald in Q2. Yes, we are in continuing discussions with potential acquisition candidates, it's not a science, it's something that has to do with when those actually staged can come in. It's potential some one of those might close before now and during Q3, or potentially in Q4. But I can't say exactly right now there's nothing that we're going to be announcing today on additional M&A revenue. That being said, when it comes to the organic side there is no changes. There is really no changes to what we said before. We believe the organic underlying growth of the business will be somewhere between (inaudible).

Judah Sokel -- JPMorgan -- Analyst

Got it. Okay, great. And then just one other question, free cash flow came in a little bit lighter than I expected in the quarter. I was hoping you could just elaborate a little bit more on what happened in the quarter and what you're expecting for the full-year? Thank you.

John Feenan -- Executive Vice President, Chief Financial Officer

Yeah Judah, good morning, this is John. It did come in a tad lighter than we expected although our cash from operations was good. It was mainly timing around our receivables. That was both in development segment as well as the maintenance segment, which we will address in the second half of the year.

Just to give you the walk on our free cash flow and the confidence level we had, if I soon and I'll do it with the low end of the range at 310. We still expect our interest expense to be $75 million there about, cash taxes somewhere around $25 million. You know look, we're going to try to get a source on our working capital, but let's assume a $10 million use and CapEx at 2.5% of revenue on a net basis which is about $60 million, that would get us to our free cash flow of approximately $140 million. So we stay really good about that with our M&A and our ability to pay down debt.

Operator

Your next question will come from Andrew Wittmann from Baird, your line is open.

Andrew Wittmann -- Robert W. Baird -- Analyst

Great thanks. I kind of wanted to see whose voice mail was going to answer, but that's OK. I was kind of curious to hear this comment here on kind of corporate expense timing and I do not know, maybe there was like consulting costs or one time items, is that what you're referring to here, I guess the other thing about the fiscal year end is probably audit fees timing is -- I just want to understand I mean corporate expense was lighter than expected and trying to understand why, and what the kind of normalized rate if you can help us on and that corporate expense segment would be helpful.

John Feenan -- Executive Vice President, Chief Financial Officer

Yeah, you're spot on Andrew. The first part of it was the timing of audit fees because of the change in the fiscal year end from December to September. So that shifted by -- that shifted by a quarter. And then we continue to manage all the corporate groups relatively aggressively. We had some timing of legal fees that were also a slight benefit in the quarter, but when I look at the balance of the year you know I would expect our corporate expenses to be right in that $17-18 million range per quarter, which is basically flat with year -- with prior year. So that's the story in corporate.

Andrew Wittmann -- Robert W. Baird -- Analyst

That's helpful. And there's another kind of confusing comment. You said somewhat surprisingly we had lower labor because of bad weather. I just hoping you could expand on that John.

John Feenan -- Executive Vice President, Chief Financial Officer

What we meant is you know look we were impacted by weather especially in the first couple of months of the quarter, which impacted our business do some more mainly on the ancillary and because we weren't able to work in both the maintenance segment and the development segment, we had less absolute labor dollars in the quarter, which was a slight benefit for us from a margin standpoint. We don't expect having the balance of the year. It was just a cork of the wetness that we saw in part of the quarter.

Operator

Next question comes from George Tong from Goldman Sachs. Your line is open.

George Tong -- Goldman Sachs -- Analyst

Hi, thanks. Good morning. You highlighted EBITDA margins as a particularly source of strength in the quarter. How do you expect EBITDA margins to perform over the rest of the year and do you now feel more comfortable with the higher end of your EBITDA guidance range?

Andrew Masterman -- President and Chief Executive Officer

Well, this is Andrew talking. As you look at margins again we had a good quarter here in the second quarter. As we go into the back half of the year, we do feel that with some of the catch up that we see happening in development coming in, which there will be a very strong H2 development number, that tend to come in at slightly lower margins. So while we do think that we are very confident about the ranges we have, really that the addition -- some of the additional revenue coming in will be at a different brought through than you would expect from me.

George Tong -- Goldman Sachs -- Analyst

Got it. That's helpful. And your maintenance green business in the quarter benefited from strong net new sales. Do you see normalized organic revenue growth accelerating in the maintenance green business based on what you're currently seeing in the pipeline?

Andrew Masterman -- President and Chief Executive Officer

Yes. That's exactly right. As we look at what we see is our net new, which is our new sales coming into the business with our retention losses. We continue the positive trend in the second quarter. When that -- usually that layers in those contracts start May, June time frame usually, beginning of May, beginning of June and thus we'll see the full-year annualized impact of significant leap up in organic growth in Q4.

Operator

Your next question will come from Phil Ng from Jefferies. Your line is open.

Philip Ng -- Jefferies -- Analyst

Hey guys. (inaudible) some time to take a hard look at your book of business. You know are the bulk of your customer base, you know the type of margins you are comfortable with and how should we handicap managed exits going forward, since that forecasted number seems to have been a tick up last few quarters?

Andrew Masterman -- President and Chief Executive Officer

Yeah, if you look at especially the managed exits, it really was a focused strategic initiative that really focused us on larger kind of high potential customers, focused our engine over there in order to how to shift the profile, right. Now that we've concluded that we do believe that in the normal course of business, obviously we'll be analyzing our portfolio and looking at the right mix of customers we have and making sure that those match kind of with the profile that we have, which is really focused on high end, high touch, high -- high degrees of sophistication in landscaping. We really benefited from the recent strong initiative that we took on that, we are also planning going forward is normalizing now.

Philip Ng -- Jefferies -- Analyst

Okay, that's helpful. And I guess, you know can I help size up this year's contract you guys kind of locked up in that February, April time frame for the back half where things do pick up perhaps any way. How that stacks up versus years past, your backlog, and then when things goes organic growth in the second half, you kind of trip out from the noise. How are you thinking about that? Is that going to be squarely in that 1% to 4% range when you can take out some noise? Thanks.

Andrew Masterman -- President and Chief Executive Officer

Yeah. When you look at the underlying contract revenue that we've grown over the course of the last -- in the bookings, you know in this net new kind of look, we believe very firmly that's going to be growing as we go into the third quarter and into the fourth quarter, into those normalized ranges. Really as we end up the only uncertainty comes with the enhancement pull through that we have in the business that being normalized at a regular level as long as that occurs, we will absolutely be seeing that kind of organic growth rates come through, again kind of in -- definitely in that kind of Q4 time frame.

Operator

Your next question will come from Shlomo Rosenbaum from Stifel. Your line is open.

Shlomo Rosenbaum -- Stifel Nicolaus -- Analyst

Hi, good morning. Thank you for taking my questions. Hey, Andrew, I'm just trying to square the bookings and the trends that you guys have had with just organic growth. I mean if you -- organically in the quarter the business shrunk a percentage and a half and even in the regular maintenance business. And can you just talk about like what's going on, and I'm just talking about excluding the businesses the managed exits and stuff and I'm just trying to understand why that has been happening, suppliers to the industry like (inaudible) are not seeing stuff like that. You just give us kind of a background as to what led to this and what's changing that's accelerating it for the second half of the year?

Andrew Masterman -- President and Chief Executive Officer

Well, if you look at the overall landscaping business, you tend not to start new contractors, OK, in either our fiscal Q1 or fiscal Q2 in that kind of October through March time frame. So when you see the contracts layering in and organic growth occurring toward the summer period, usually that will have that residual impact into the back half or into that kind of our Q1, Q2 time period.

So as you look at what has happened is we've kind of stayed pretty stable, little -- slight shrinkage. And the reason that happened this quarter in particular with that 1% you're referring to it really happened down to the ancillary pull through. The wet weather that we had really impacted our ability to get ancillary product or enhancements in the ground. We had the orders, but just an unseasonably level of wet weather in our evergreen markets really impacted that ability to deliver a year-over-year comparison, which is last year.

Shlomo Rosenbaum -- Stifel Nicolaus -- Analyst

But you know we have last year have unseasonably wet snow have make it a particularly easy comp on the pull through of extra work that usually comes through in the spring.

Andrew Masterman -- President and Chief Executive Officer

There was some snow at the very end. There was some of that, but it was not -- it was only in the northeastern markets. It was not in the evergreen markets. And really when you see enhancements come through, those are primarily a bigger and bigger impact in this quarter or enhancements or larger impacts actually is in evergreen markets.

Operator

Your next question will come from Tim Mulrooney from William Blair. Your line is open.

Tim Mulrooney -- William Blair -- Analyst

Good morning.

Andrew Masterman -- President and Chief Executive Officer

Good morning.

Tim Mulrooney -- William Blair -- Analyst

So the maintenance snow revenue came in a little bit stronger than I expected. Were there certain regions that surprised you guys to the upside since your prior conference call?

Andrew Masterman -- President and Chief Executive Officer

Yeah, I mean if you look at what happened in snow this outsized weather pattern we had in Colorado and the Midwest and Pacific Northwest, had a pretty big impact on us. The Northeast was particularly (inaudible) as you look over year-over-year, it was 33% decline. So yeah, the shape of snow wasn't as we expected it to occur at the beginning of the year or even at the beginning of the second quarter, but at the end of the day that effect delivery of the overall profile for the company.

Tim Mulrooney -- William Blair -- Analyst

Okay. I thought that came in stronger than you were expected, I just wanted to make sure. So that's helpful. Moving to development, I get that your --your backlog gives you confidence into the back half of this year, but Andrew, if you're looking out a little bit further I know you book out further in advance than that sometimes. How does your backlog, how do bookings look beyond the back half of 2019? Thank you.

Andrew Masterman -- President and Chief Executive Officer

Yeah that's a good question. We really don't -- we're not guiding yet to 2020 about what we see out there specifically in any numbers. That being said I can say that in general, when you look at the second half, we are almost 100% booked on the development side of business. And the inquiries on a level of booking, negotiations that are continuing now and as we look out into 2020 there is nothing giving us any kind of pause on the development business as we look into the future.

Operator

The next question will come from Kevin McVeigh from Credit Suisse. Your line is open.

Kevin McVeigh -- Credit Suisse -- Analyst

Great, thanks. Was there -- in terms of weather delays on the project side, did any of that kind of flow through to the maintenance and was there some kind of offset on the maintenance that would have kind of offset some of those project delays?

Andrew Masterman -- President and Chief Executive Officer

Well, I would say no they didn't correlate between maintenance and development specifically. However, there was certainly especially in Southern California there were delays in development, which impacted the ability to put landscaping in the ground. And so, some of it -- but also remember in development, it's sequential so we have to have the subcontractors before us finish before we can get in. So it was kind of a cascading effect and by the way right now, the development groups are fully on the field executing to that activity which that residual lag coming in from Q2 into Q3.

On maintenance sites, it did -- the weather did have an impact in the fact and the ability to get enhancements in the ground. I mean we're not talking a huge impact, but it did have a slight impact on our ability to get ancillary pull through in those same markets that impacted development.

Kevin McVeigh -- Credit Suisse -- Analyst

That's helpful. And then the 5,000 seasonal workers you hired. Is that pretty consistent with historical trends and just any thoughts on labor in terms of bringing them on board, any thoughts around that would be helpful?

Andrew Masterman -- President and Chief Executive Officer

Yes absolutely. You know one thing that has occurred in the business is that the groups out in the branches have been quite resilient. And over the course of the last several months you know in any -- in our business as it is very seasonal in some markets, we've added over 5,000 workers. We've hired over 5,000 people over the last couple of several months. And we basically have done that and that's outside of any H2A. H2B has been a very minimal result this year. And in fact if you look at over the last three years, it's the lowest amount we've had. And so we really have to focus more on really engaging local teams and making sure we're staffed locally with people there to execute on the contracts we have.

Operator

Your next question will come from Seth Weber from RBC Capital Markets. Your line is open.

Seth Weber -- RBC Capital Markets -- Analyst

Hey good morning everybody. Just wanted to go back again to the development discussion, is there any more color on what you think is driving the strength there for the order book, more feet on the ground or are there any verticals you'd call out specifically? And then you know as a follow up, is there -- do you think that the margins will be up, the EBITDA margins will be up year-over-year for the second half for that business versus prior year? Thank you.

Andrew Masterman -- President and Chief Executive Officer

If I can give you some color on development, I'd have to say it's broad based. You know in the sectors where we have typically had a lot of engagement you know hotels, you look at corporate campuses, you look at high class A offices, you see those kinds of very -- we typically had a lot of development success. Those continued to be just robust in the development areas and that's really across the country. So I would say those where we typically have performed in the past is where we typically see going forward in the future.

I'll let John speak a bit on the margins on the development side.

John Feenan -- Executive Vice President, Chief Financial Officer

Yes, when you look -- remember we had a challenging first quarter in this business, but when you look at the margins in the second half of the year on the development business, you know we expect them to be pretty much right in line maybe a little bit better from where they were in the second half of last year. Very consistent with what we expect there, but if you then look at it over the full year, will be slightly down in fiscal '19 versus '18 driven mainly by that first quarter that's already in the books. But we still -- we feel good about the second quarter, excuse me, the second half.

Operator

Your next question will come from Dan Dolev from Nomura. Your line is open.

Dan Dolev -- Nomura -- Analyst

Hey guys. Nice results on the maintenance uptick and organic growth.

Andrew Masterman -- President and Chief Executive Officer

Thanks Dan.

John Feenan -- Executive Vice President, Chief Financial Officer

Thanks Dan.

Dan Dolev -- Nomura -- Analyst

Yeah. Good job. Hey, looking at sort of the M&A contribution for the year and the pruning, I think you're running about 63% of the M&A that you guided to and you know 80% of the pruning, is that you know that sort of how we should think about it or is there going to be kind of maybe more unanticipated M&A in the second half or basically in line with that $75 million? Then I have a follow-up.

Andrew Masterman -- President and Chief Executive Officer

Sure. The M&A side, we've already executed on the M&A to deliver the $75 million. So that's kind of -- our forecast right now that's about where we should come in at. We have several companies that we're currently under discussion with in the M&A pipeline that could close sometime in the next quarter or two. So I'm not saying there isn't either, it could be some additional activity. Remember they layers in, I just don't have -- have actually closed any of deals yet. So possible, but I'm not going to be betting on it right now.

Dan Dolev -- Nomura -- Analyst

Got it. And just a quick housekeeping, I don't know if you were asked before, but what was the contribution from development M&A in the quarter? I know it was small.

John Feenan -- Executive Vice President, Chief Financial Officer

It was very small. Yeah. And when we say development M&A those are basically projects as you can imagine landscaping companies aren't 100% pure maintenance all the time. So these are projects in small development groups that come along with our primary focus.

Andrew Masterman -- President and Chief Executive Officer

Yes, Dan, it was a couple of million bucks of revenue. So it's really de minimus to our bottom line impact.

Operator

Your next question will come from Sam England from Berenberg. Your line is open.

Sam England -- Berenberg -- Analyst

Hi guys. First one, could you just give a bit more color on the efficiency initiatives that you mentioned in maintenance services and how much more you think there is to do both in H2 and 2020 and beyond?

Andrew Masterman -- President and Chief Executive Officer

Yeah. There are multiple efficiency things going on. Maybe I'll go into the electronic time capture initiative primarily. There are several things that we're utilizing that tool you can imagine. We went from a state where there were basically paper capture of time with no specific linkage to a property or a drive pattern or from the ability to dispatch our folks at different yards.

So those kinds of initiatives are now with electronic time capture. We're capturing actually the time it takes to travel, the time it takes to get our crews out and into the field. Ultimately what that does is it is going to free up time to allow us to put more effort into the property or do potentially over the course of the week an extra property in the cycle that we have. Those kinds of initiatives that is our primary focus we're having.

John Feenan -- Executive Vice President, Chief Financial Officer

Yeah and Sam, this is John. I'll add a little bit to what Andrew said on the efficiencies. In addition to electronic time capture, that's giving our managers great visibility into labor which is our largest cost component in our structure and so that's how we're able to manage the hours more efficiently by having that daily information.

And then there's the whole slew of other things around what we're doing in the branches on a daily, weekly, monthly basis, you know small things like repairs and maintenance on our equipment, how we are managing the fleet, how we are purchasing our materials, all of those things coupled with our pricing, which we've talked about historically is really leading to some of the margin expansion that we saw in the second quarter and that we continue to drive in this business.

Sam England -- Berenberg -- Analyst

Great, thanks. And then just to follow up one, on the acquisitions, I wondered how multiples are shaping up this year whether there's been any change in competition for assets or any inflation in the multiples you're seeing gained demand.

Andrew Masterman -- President and Chief Executive Officer

Yes, we still see -- look we keep some rigor around our acquisition multiple and what we pay for companies. We as we have historically been in the market those multiples we've talked about in the past, those are really squarely where we continue to be at. We're not going into specifically what multiples we're paying, but I can say that we walk away from deals, which have inflated expectations and if they go find the buyer again, we feel that we've paid very fair and market based prices for the acquisitions we did.

Operator

Your next question will come from Andrew Wittmann from Baird. Your line is open.

Andrew Wittmann -- Robert W. Baird -- Analyst

Okay. Thanks for taking my follow up guys. This is -- you kind of touched on a little bit. I want to ask you a little bit different way, but just John you made the comment of 10 basis points to 30 basis points for margin there are few areas that probably maybe a little closer to the low end. I guess inside of that you know what are some of the benefits, what are some of the negatives and maybe specifically in your answer if you could just talk about how the price cost dynamic is shaping up for you today, if there's any change or what you're seeing there?

John Feenan -- Executive Vice President, Chief Financial Officer

Now you got a couple of different questions in there. Andy, so I'll address the first one, I mean the reason we said the potential lower end is because of the challenge that we had in the second quarter on the development side. We expect that business to be more pronounced than it may have been historically in the second half of the year because it's lower margin in nature that will have more of a downward effect, for lack of a better word, on our full margins for the year. As you know last year we generated 80 basis points, this year we said 10 to 30, we're still working very hard to get there, don't get me wrong, we just want to be very clear they could be a little bit on the lower end because of that influx on the development side.

And then your question on managing the price versus the labor. We continue to be real proactive on our pricing. I think we mentioned we've instituted some additional call it tightness in our metrics on how we're measuring it as far as absolute dollars versus pure percentages that as worked out very well across the entire business. So people know exactly what their absolute dollar amount is and that traction on price has really allowed us to offset for the most part, like we've been able to do historically any inflation we're seeing on the labor side.

Andrew Wittmann -- Robert W. Baird -- Analyst

Great. Thank you.

John Feenan -- Executive Vice President, Chief Financial Officer

You are welcome.

Operator

Your next question will come from Shlomo Rosenbaum from Stifel. Your line is open

Shlomo Rosenbaum -- Stifel Nicolaus -- Analyst

Hi. Thank you for squeezing me back in. I just want to ask a little bit more on the managed exits expectation. Last quarter you said $25 million was the expectation for the year. I didn't see anything a number for this quarter, and I want to know if that's the same. And also if you can kind of discuss how that has enhanced the EBITDA by getting out of those either some way we can get a good understanding of you know how that's been kind of addition by subtraction.

Andrew Masterman -- President and Chief Executive Officer

Sure, I can handle that Shlomo. When it comes down to really the whole managed exits initiative, the numbers you asked we said $9.4 million in this quarter which then results in a $20.2 million total through the first half. As we talked about in the past, you know we're going -- this concludes in the middle of summer and we'll continue to disclose this particular initiative through third quarter. It'll be somewhere less than $9 million or so in 3Q. So it's going to actually have a little lift as we said last quarter, slightly be higher than 25, that would put it slightly around 29ish or so.

And then of course there's tails, right, these things then cascade and they'll be going on for another six months or so after that. The rest of the tail will be basically in kind of our normal retention rates that you would see and be basically overcome through organic growth that really and we're quite positive about that on the organic growth. So the tail does exist out there through Q4 into Q1 of 2020. We are going to necessarily be talking about it too much specifically because it is really just going to be overshadowed by the growth that we have in the business and in the normal course of business.

John Feenan -- Executive Vice President, Chief Financial Officer

And Shlomo, this is John I'll jump in and answer your question on the enhancement and the EBITDA margin. In the quarter, we showed the results being up a 100 basis points from 12.7 to 13.7 in the maintenance business. Managed exits was about 20% of that, the 20 bps out of that 100 bps, so it's meaningful. Other things that we've been working on that we that we disclosed around efficiencies and productivity so it is not just managed exits, but it was about I think 20 bps out of 100.

Shlomo Rosenbaum -- Stifel Nicolaus -- Analyst

Okay, great. Thank you.

Operator

(Operator Instructions) Your next question comes from Sam Hoffman from Lincoln Square. Your line is open.

Sam Hoffman -- Lincoln Square -- Analyst

Good morning. Thanks for taking my call. I just had a few clarifications. On the ancillary projects which did not come through this quarter in both maintenance and possibly in development, are those projects that you actually won but were postponed until the next quarter or the summer or are they just projects that could not happen because of the weather?

John Feenan -- Executive Vice President, Chief Financial Officer

Yes in both of those situations in the development world -- yeah those are projects and contracts we won and we are just -- they are just kind of cascade now into the third quarter and fourth quarter. So absolutely those are still there. And same side on the enhancements, it's projects that were one that we intended to be completed within the March time period. You know it rained or had some weather circumstance, which didn't allow me to get it in and those basically roll into the April time period to get those on the ground.

Sam Hoffman -- Lincoln Square -- Analyst

Okay. Second clarification is when you said that the development unit is 100% booked heading into the back half of the calendar year, what type of organic growth does that imply, what are your objectives in terms of -- you hire a certain number of people and then you're booking 100% toward what type of organic growth?

Andrew Masterman -- President and Chief Executive Officer

We haven't disclosed specifically segment level growth targets that we have or at least we have guided, we've been targets out there. We said development is going to grow 1% to 2% per year. We believe that this underpins that and squarely lands us in that 1% to 4% that we have for the entire company's organic growth guidance we've given.

Operator

At this time I have no further questions in queue. I turn the call back over to Mr. Masterman for closing remarks.

Andrew Masterman -- President and Chief Executive Officer

Thank you Michel. Once again I want to thank everyone participating in the call today and for your interest in BrightView. If you have any follow up questions please don't hesitate to reach out to us. We look forward to speaking with you when we report our third quarter of fiscal 2019 results in early August. Thank you very much.

Operator

Thank you everyone. This will conclude today's conference call you may now disconnect.

Duration: 55 minutes

Call participants:

Daniel Schleiniger -- Vice President of Investor Relations

Andrew Masterman -- President and Chief Executive Officer

John Feenan -- Executive Vice President, Chief Financial Officer

Judah Sokel -- JPMorgan -- Analyst

Andrew Wittmann -- Robert W. Baird -- Analyst

George Tong -- Goldman Sachs -- Analyst

Philip Ng -- Jefferies -- Analyst

Shlomo Rosenbaum -- Stifel Nicolaus -- Analyst

Tim Mulrooney -- William Blair -- Analyst

Kevin McVeigh -- Credit Suisse -- Analyst

Seth Weber -- RBC Capital Markets -- Analyst

Dan Dolev -- Nomura -- Analyst

Sam England -- Berenberg -- Analyst

Sam Hoffman -- Lincoln Square -- Analyst

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