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BrightView Holdings Sticks to Management's Script

By Tyler Crowe – Updated Aug 8, 2019 at 12:35PM

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Even though the company's financials look sluggish, its leadership says that things are going as planned and investors can expect better results for the rest of the fiscal year.

BrightView Holdings (BV 4.71%) has had a short but challenging life as a publicly traded company. While management of the commercial landscaper has been looking to improve profitability, clean up the balance sheet, and consolidate the overall landscaping business, its financials have yet to show much progress. There are some signs of improvement, though, and the rest of the year could prove fruitful if the company can meet management's expectations. Here's a look at the company's most recent results. 

Oracle Park field in San Fransisco

Oracle Park in San Francisco is a client of BrightView. Image source: BrightView Holdings.

BrightView Holdings results: The raw numbers

Metric FQ3 2019 FQ2 2019 FQ3 2018
Revenue $657.2 million $596.6 million $630.3 million
Adjusted EBITDA $101.9 million $61.1 million $97.8 million
Net income (loss) $31.7 million ($3.6 million) ($1.4 million)
EPS (diluted) $0.31 ($0.04) ($0.02)

Data source: BrightView Holdings. 

Results are following the plan that management has laid out thus far. Revenue and earnings are ticking up only slightly because it is in the midst of a major turnover of service contracts. Acquisitions and restructured contracts are offsetting its "managed exits," which is management's fancy term for saying it's dropping unprofitable customers.

On a segment basis, management noted that wetter-than-usual weather in some regions hampered results for both maintenance and development services. On the maintenance side, it was able to grow mostly through acquisitions, whereas its development services business increased on new bookings, such as doing all the field prep for Major League Baseball's London Series in June.

BV adjusted EBITDA by business segment for FQ3 2018, FQ2 2019, and FQ3 2019. Shows increase in development services.

Data source: BrightView Holdings. 

What happened at BrightView Holdings this quarter?

  • BrightView got back to acquiring companies to consolidate the fragmented landscaping business by buying Luke's Landscaping in South Florida and Desert Classic Landscaping in the Phoenix metro region from FirstService Residential (FSV 0.96%)
  • Management noted that it has completed its "managed exit" program, but investors should expect to see impacts from this over the next two quarters.
  • Total debt and net for the quarter remained steady at $1.18 billion and $1.17 billion, respectively. The slight uptick in adjusted EBITDA meant that its net-debt-to-EBITDA ratio declined to 3.9 times. Management still anticipates it will be able to reduce this ratio to 3.5 times by the end of the fiscal year.
  • Management is rolling out a suite of new technology to improve efficiency, including digital time logs and new customer relationship management software.
  • Guidance for the fiscal year remained unchanged.

What management had to say

On BrightView's conference call, CEO Andrew Masterman broke out some of the benefits of its merger & acquisition (M&A) strategy and how it's moving the needle on the revenue side:

A few minutes ago, I mentioned that we realized $25 million in additional revenue from M&A during the third quarter. That figure includes contributions from earlier acquisitions such as Russell, Emerald, and Benchmark, as well as the transactions that I referenced in my opening comments. In May, we acquired Luke's Landscaping and Desert Classic in the South Florida and Phoenix markets, respectively. We are excited to welcome about 500 new associates and their customers to the BrightView family. Having visited with all of the team since completing the transactions, I'm excited with the progress each one has made so far and look forward to reaping the benefits of optimizing our footprints in each of those key markets. 

You can read a full transcript of BrightView Holding's conference call here

BV Chart

BV data by YCharts.

Looking forward

Management seems optimistic that it will be able to meet its stated guidance for the fiscal year, but the numbers it has posted thus far seem to indicate it will fall short of those goals with only a quarter to go. Management noted that incorporating these recent acquisitions and completing its managed exit plan will allow it to get there. 

It will be worth watching how the company completes the fiscal year and several of management's initiatives. If they can have the impact management implies, then BrightView could have much brighter days ahead. 

Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool recommends BrightView Holdings, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

BrightView Holdings, Inc. Stock Quote
BrightView Holdings, Inc.
BV
$8.01 (4.71%) $0.36
FirstService Corporation Stock Quote
FirstService Corporation
FSV
$119.67 (0.96%) $1.14

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