Wall Street hasn't been too keen on BrightView Holdings (BV -2.52%) since it went public in 2018. Its stock is down more than 35% from its initial public offering price, but management has plans to improve the company's fortunes by focusing more on its most profitable operations, and to grow via consolidation in the highly fragmented landscaping, lawn care, and snow removal businesses. In its fiscal first quarter, which ended Dec. 31, all of these elements were on display. Here's a brief look at BrightView's latest earnings results.
Image source: BrightView Holdings.
BrightView Holdings earnings: The raw numbers
| Metric | FQ1 2019 | FQ4 2018 | FQ1 2018 |
|---|---|---|---|
| Revenue | $526.0 million | $581.8 million | $551.1 million |
| Adjusted EBITDA | $50.1 million | $84.2 million | $66.4 million |
| Net income | ($8.8 million) | ($10.9 million) | $19.3 million |
| EPS (diluted) | ($0.09) | ($0.11) | $0.25 |
Data source: BrightView Holdings. EPS = Earnings per share.
Even though the company's results are down compared to this time last year, some of that was to be expected. Not only has management made it a point to exit several of its non-profitable accounts over the past year, but in the first quarter of 2018, the company was also benefiting from cleanup related to Hurricanes Irma and Maria. These effects, plus lower-than-usual snow removal activity in its operating regions, led to an 8.9% decline in landscape management revenue overall, but management was able to offset some of that through acquisitions.
Data source: BrightView Holdings. Chart by author.
What happened this quarter?
- After acquiring five companies in fiscal Q4, management announced this time that it had acquired Emerald Landscape Company of the California Bay area and Benchmark Landscapes of Central Texas. Both deals came after the end of Q1, and financial terms weren't disclosed.
- Total debt at the end of the quarter was $1.17 billion, with total cash on hand of $17 million. The company's net debt to adjusted EBITDA ratio was 4.1.
- For fiscal 2019, management expects revenue of between $2.4 billion and $2.47 billion, and adjusted EBITDA in the $310 million to $318 million range. It assumes that it will lose about $25 million in revenue due to its managed exit from some of its less profitable contracts.
- Management forecast that capital spending for the year would be around 2.5% of revenue.
Check out the latest BrightView earnings call transcript.
What management had to say
Here's CEO Andrew Masterman in the company's press release statement explaining some of the reasons for the lower revenue numbers, and why management is maintaining its guidance for the year:
Our financial results reflect the challenging prior-year hurricane comparisons, our strategic Managed Exit initiative and other operating conditions that we highlighted in our guidance on our November 2018 earnings conference call, as well as a slow start to the season for our snow removal services. Since we planned for these seasonal and episodic factors, we are not changing our outlook for full fiscal 2019. Our net new sales, which will benefit the upcoming 'green' maintenance season, are the highest they have been in three years; our development project bookings are ahead of last year's pace and our strong-on-strong acquisition strategy already has added three companies with enough expected revenue impact to reach our full year fiscal 2019 target of $75 million.
Looking forward
BrightView has had a rough go of it since it IPO'd back in June, but management seems steadfast in its plans to become more profitable by managing its clients and growing through acquisition. Investors should watch for progress in signing up new customers and acquiring new businesses, with an eye toward seeing how much those efforts improve the company's bottom line.
