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BrightView Reports Fourth Quarter and Full Year Fiscal 2018 Results

Share:

Achieved fiscal year revenue of $2.35 billion; the highest in the
Company's history

For full fiscal 2018, Reported a GAAP Net Loss of $15.1 million and
Generated Adjusted EBITDA of $300.1 million

For the fourth fiscal quarter, Reported a GAAP Net Loss of $10.9
million, or ($0.11) per share, Adjusted EBITDA of $84.2 million and
Adjusted Net Income of $35.8 million, or $0.35 per share

BrightView Holdings, Inc. (NYSE:BV) (the "Company" or "BrightView"),
the leading commercial landscaping services company in the United
States, today reported unaudited results for the fourth quarter and full
fiscal year ended September 30, 2018.

This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20181127005818/en/

(Graphic: Business Wire)

(Graphic: Business Wire)

Fourth Quarter Fiscal 2018 Highlights

  • Total revenues for the quarter increased 2.6% versus the prior year
    quarter, totaling $581.8 million, with 3.5% higher Maintenance
    Services Segment revenues and flat Development Services Segment
    revenues;
  • Net loss of $10.9 million, or ($0.11) per share, compared to net
    income of $0.4 million in the prior year quarter;
  • Adjusted EBITDA increased 5.6% to $84.2 million, with a 40 bps
    Adjusted EBITDA margin improvement to 14.5%;
  • Adjusted Net Income increased 48.2% to $35.8 million, or $0.35 per
    share;
  • Extended and amended the Company's long-term Credit Facilities.

Full Year Fiscal 2018 Highlights

  • Total revenues in 2018 increased 5.7% versus the prior year, totaling
    a record $2,353.6 million, with 7.4% higher Maintenance Services
    Segment and 1.1% higher Development Services Segment revenues;
  • Net loss of $15.1 million, or ($0.18) per share, compared to net loss
    of $37.4 million in 2017;
  • Adjusted EBITDA increased 12.6% to $300.1 million, with an 80 bps
    Adjusted EBITDA margin improvement to 12.8%;
  • Adjusted Net Income increased 54.8% to $90.0 million, or $1.08 per
    share;
  • Net Cash Provided by Operating Activities increased by $56.2 million
    to $180.4 million and Adjusted Free Cash Flow increased by $57.2
    million to $127.6 million;
  • Completed five acquisitions with an estimated $117.6 million of
    aggregate annualized revenue, for aggregate consideration of $104.4
    million, net of cash.

"I am very pleased with the progress we made last year to support
sustainable topline growth, capture efficiencies in our cost structure
and generate substantial adjusted free cash flow. We delivered the
highest revenue and profitability in our history, meaningfully reduced
our balance sheet leverage, and successfully completed our IPO. Moving
forward now as a public company, we will remain focused on growing our
existing customer relationships, continuing our 'strong on strong'
acquisition strategy, and driving further cash flow generation," said
Andrew Masterman, BrightView Chief Executive Officer. "As we begin our
2019 fiscal year, industry trends remain favorable, our acquisition
pipeline is strong, and I am confident that we have the right strategy
in place to create significant stockholder value as we continue
consolidating our position as the Nation's Landscaper."

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, Adjusted Free Cash Flow and
Adjusted Earnings per Share are non-GAAP measures. Refer to the
"Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP
Financial Measures" sections for more information.

Fiscal 2018 Results – Total BrightView

               
Total BrightView - Operating Highlights                        
Three Months Ended September 30, Twelve Months Ended September 30,
($ in millions, except per share figures)     2018     2017     Change     2018     2017     Change
Total Revenue     $581.8     $567.0     2.6%     $2,353.6     $2,225.9     5.7%
Net (loss) income     ($10.9)     $0.4     nm     ($15.1)     ($37.4)     nm
Adjusted EBITDA     $84.2     $79.7     5.6%     $300.1     $266.6     12.6%
Adjusted EBITDA Margin     14.5%     14.1%     40 bps     12.8%     12.0%     80 bps
Adjusted Net Income     $35.8     $24.2     48.2%     $90.0     $58.1     54.8%
Earnings per Share, GAAP     ($0.11)     $0.01     nm     ($0.18)     ($0.49)     nm
Earnings per Share, Adjusted $0.35     $0.31     12.9% $1.08 $0.75 44.0%
 

For the fourth quarter fiscal 2018, total revenue increased 2.6% to
$581.8 million due to growth in the Maintenance Services Segment and
flat Development Services Segment revenue. Total Adjusted EBITDA grew
5.6% driven by higher revenues, increased profitability in both segments
and efficiencies captured in SG&A.

For fiscal 2018, total revenue increased 5.7% to $2,353.6 million
supported by growth in both the Maintenance Services Segment and
Development Services Segment revenues. Total Adjusted EBITDA was $300.1
million, up 12.6% versus the prior year, driven by higher revenues,
improved profitability in the Maintenance Services Segment and
efficiencies captured in SG&A.

Fiscal 2018 Results – Segments

           
Maintenance Services Segment - Operating Highlights            
Three Months Ended September 30, Twelve Months Ended September 30,
($ in millions)     2018     2017     Change     2018     2017     Change
Landscape Maintenance Services     $433.7     $418.4     3.7%     $1,522.5     $1,458.9     4.4%
Snow Removal Services     ($0.3)     $0.2     nm     $252.3     $192.9     30.8%
Total Segment Revenue     $433.4     $418.6     3.5%     $1,774.8     $1,651.8     7.4%
Adjusted EBITDA     $79.6     $76.8     3.5%     $289.8     $258.0     12.3%
Adjusted EBITDA Margin     18.4%     18.4%     0 bps     16.3%     15.6%     70 bps
Capital Expenditures $11.8     $6.6     79.8% $45.5     $47.4 (3.8%)
 

For the fourth quarter fiscal 2018, revenue in the Maintenance Services
Segment rose 3.5% to $433.4 million. Landscape Maintenance Services
revenue rose 3.7%, driving the segment's revenue growth. Acquisitions
added 7.7% but were partially offset by a 4.0% negative revenue
contribution from commercial landscaping. Within this decline,
underlying commercial landscaping contributed 1.5% to growth with
offsetting impacts of 2.9%, from a difficult comparison with the revenue
related to Hurricane Irma clean-up in the fourth quarter of 2017, and
2.6%, from Managed Exits as the Company strategically reduced the number
of less profitable accounts established in previous years.

Adjusted EBITDA for the Maintenance Services Segment in the quarter
increased 3.5% to $79.6 million, with the Adjusted EBITDA margin
remaining flat versus the prior year quarter.

For full year fiscal 2018, revenue for the Maintenance Services Segment
increased 7.4% to $1,774.8 million, with Landscape Maintenance Services
revenue 4.4% higher and Snow Removal Services revenue, compared with a
far-below-average prior year, up 30.8%. Acquired businesses added 6.6%
to the growth of Landscape Maintenance Services revenue, while
commercial landscaping reduced growth by 2.2%. The decline in commercial
landscaping revenue was mostly due to the strategic Managed Exits
initiative, which reduced revenue by 1.6%. The balance of the decline
was largely due to an early-year loss in the Company's national accounts
portfolio. The timing of Hurricane Irma in September and October of 2017
caused it to generate similar revenue in consecutive quarters over two
different fiscal years. As a result, the quarterly comparisons versus
the prior year created a variance but the full-year comparison was muted.

Adjusted EBITDA for the Maintenance Services Segment in fiscal 2018
increased 12.3% to $289.8 million, with an Adjusted EBITDA margin
expansion of 70 basis points to 16.3%.

           
Development Services Segment - Operating Highlights
Three Months Ended September 30, Twelve Months Ended September 30,
($ in millions)     2018     2017     Change     2018     2017     Change
Total Segment Revenue     $149.7     $149.9     (0.1%)     $583.3     $577.2     1.1%
Adjusted EBITDA     $23.4     $18.0     30.0%     $78.7     $77.4     1.7%
Adjusted EBITDA Margin     15.7%     12.0%     370 bps     13.5%     13.4%     10 bps
Capital Expenditures $0.9     $1.9     (50.5%) $4.9     $6.2 (21.7%)
 

Revenues for the Development Services Segment were relatively flat at
$149.7 million for the fourth quarter fiscal 2018. New project revenue
and project revenue derived from Maintenance Services acquisitions
contributed to offset a comparison with the timing of work performed on
certain large projects in the prior year period.

Adjusted EBITDA for the Development Services Segment increased 30% to
$23.4 million in the quarter, benefitting from the substantial
completion of certain large lower margin projects that impacted the
prior year quarter.

Revenue in the Development Services Segment increased 1.1% to $583.3
million for fiscal 2018, driven by $7.2 million in project revenue
derived from Maintenance Services acquisitions. Revenue from new
projects in fiscal 2018 largely offset the revenue generated by certain
large projects in the prior year.

Adjusted EBITDA in the Development Services Segment increased 1.7% to
$78.7 million for fiscal 2018. Segment Adjusted EBITDA Margin was 13.5%,
or relatively flat compared to the prior year.

   
Total BrightView Cash Flow and Balance Sheet Metrics
Twelve Months Ended September 30,
($ in millions)     2018     2017     Change
Cash Provided by Operating Activities     $180.4     $124.2     45.2%
Adjusted Free Cash Flow     $127.6     $70.4     81.2%
Capital Expenditures     $86.4     $60.9     41.9%
Total Financial Debt1     $1,184.4     $1,639.7     (27.8%)
Total Cash & Equivalents     $35.2     $12.8     175.6%
Net Debt2 to Adjusted EBITDA ratio 3.8x     6.1x     -2.3x

1Total Financial Debt equals total long term debt, less
original issue discount, plus the present value of net minimum lease
payments under capital lease obligations.

2 Net Debt equals Total Financial Debt minus Total Cash &
Equivalents

Net cash provided by operating activities for the twelve months ended
September 30, 2018 was $180.4 million, compared to $124.2 million for
the prior year. Adjusted Free Cash Flow for the year ended September 30,
2018 was $127.6 million, an increase in cash generation of $57.2 million
over the prior year. The increases are reflective of higher operating
cash flows and improvements in working capital management.

For fiscal 2018, capital expenditures were $86.4 million, compared with
$60.9 million last year, driven by the purchase of legacy ValleyCrest
facilities for $21.6 million in October 2017. The Company also generated
proceeds from the sale of property and equipment of $12.0 million and
$7.0 million in 2018 and 2017, respectively. Net of the legacy asset
purchase in 2018 and the proceeds from the sale of property and
equipment in each year, capital expenditures represented 2.2% and 2.4%
of revenue in 2018 and 2017, respectively.

As of September 30, 2018, the Company's Net Debt2 was $1.15
billion, a reduction of $478 million compared to $1.63 billion at the
prior year end. Combined with higher Adjusted EBITDA generation for the
fiscal year, the change in the Company's net debt led to a Net Debt to
Adjusted EBITDA ratio of 3.8x as of September 30, 2018.

In connection with the Company's term loan repayments during the fourth
quarter of fiscal 2018, the Company incurred non-cash losses on debt
extinguishment of $25.1 million in the period. These non-cash losses,
which are included in the "Other (Expense) Income" line of the income
statement, arose from the accelerated amortization of deferred financing
fees and the original issue discount.

2019 Fiscal Year Outlook

For the full year fiscal 2019, BrightView is providing the following
guidance:

  • Total Revenue of between $2,400 million and $2,470 million;
  • Adjusted EBITDA of between $310 million and $318 million;
  • Managed Exits of $15 to $25 million in revenue, declining over the
    course of the fiscal year;
  • Net Capital Expenditures of approximately 2.5% of revenue.

Although the first quarter of 2019 faces a comparison of $17.5 million
in hurricane clean-up revenue in the prior-year first quarter (including
$4.0 million from acquired businesses), underlying trends in the
industry are expected to remain positive for the 2019 fiscal year,
supporting topline growth in the Company's existing footprint as well as
a robust acquisition pipeline for the year. BrightView plans to continue
its strategic approach to pricing, service enhancements, customer
retention, new business development and "strong on strong" acquisitions.
Finally, the Company will work to identify additional opportunities to
leverage its SG&A and Corporate expenses in order to further expand
operating margins.

The Company is 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, such as items discussed below under the heading "Non-GAAP
Financial Measures." Additionally, information that is currently not
available to the Company could have a potentially unpredictable and
potentially significant impact on its future GAAP financial results.

Recent Developments

California Wildfires

As of the date of this release, the devastating wildfires in both
Northern and Southern California that began during the month of November
2018, have not caused material damage to either the Company's office in
Calabasas, CA, or its branch offices in the state. The Company is
monitoring the situation but does not currently expect the wildfires to
have a material impact on its employees, revenue stream or cost
structure moving forward.

Daniel Schleiniger Appointed Vice President of Investor Relations

Daniel Schleiniger joined BrightView at the end of October 2018 as the
new Vice President of Investor Relations, reporting to John Feenan,
BrightView's Chief Financial Officer. Dan's most recent position, prior
to joining BrightView, was VP of Corporate Communications and Investor
Relations for Arcos Dorados (NYSE:ARCO). His career includes broad
international experience across a number of finance functions including
equity research, investor relations, financial planning and analysis as
well as treasury and portfolio management. Dan holds a Bachelor of
Science degree in chemistry from the University of Delaware and an MBA
in Finance from the same institution. He will be based in BrightView's
Plymouth Meeting, PA headquarters.

Revised Fiscal Calendar

The Company revised its fiscal year end from December 31 to September 30
of each year, beginning with September 30, 2017. The period from January
1, 2017 through September 30, 2017 was recorded as a transition period.
Year-over-year comparisons of annual financial results included in this
press release and the attached financial tables compare results for
BrightView's full fiscal year 2018 (October 1, 2017 through September
30, 2018) to the Company's twelve months ended September 30, 2017
(October 1, 2016 through September 30, 2017).

Conference Call Information

A conference call to discuss the fourth quarter and fiscal 2018
financial results is scheduled for November 28, 2018, at 10 a.m. Eastern
Standard Time. The U.S. toll free dial-in for the conference call is
(877) 273-7124 and the international dial-in is (647) 689-5396. The
conference passcode is 5667795. 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
Dec 16, 2018, by dialing 800-585-8367 from the U.S., and entering
conference passcode 5667795. A replay of the audio webcast also will be
archived on the Company's investor website.

About BrightView

BrightView is the largest provider of commercial landscaping services in
the United States. Through its team of approximately 20,000 employees,
BrightView provides services ranging from landscape maintenance and
enhancements to tree care and landscape development for thousands of
customers' properties, including corporate and commercial properties,
HOAs, public parks, hotels and resorts, hospitals and other healthcare
facilities, educational institutions, restaurants and retail, and golf
courses, among others.

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 made
under "2019 Fiscal Year Outlook" and 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-K for the annual period ended September 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. Any
forward-looking statement made in this press release speaks only as of
the date on which it was made. 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" "Adjusted Earnings per Share" and "Adjusted Free Cash Flow". We
believe Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Earnings per Share 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. Management uses
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
Earnings per Share 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, Adjusted Net Income per Share 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, Adjusted Earnings per Share
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 Earnings per Share: We define Adjusted Earnings per Share as
Adjusted Net Income divided by the weighted average number of common
shares outstanding for the period.

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, Adjusted
Earnings per Share 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.

 

BrightView Holdings, Inc.

Consolidated Balance Sheets

(Unaudited)

 
 
    September 30,

2018

    September 30,

2017

(in millions)*
Assets
Current assets:
Cash and cash equivalents $ 35.2 $ 12.8
Accounts receivable, net 317.1 330.2
Unbilled revenue 99.9 88.9
Inventories 23.8 25.0
Other current assets   55.2   45.7
Total current assets 531.2 502.5
Property and equipment, net 256.8 245.5
Intangible assets, net 290.5 371.3
Goodwill 1,766.8 1,703.8
Other assets   46.7   35.5
Total assets   2,891.9   2,858.6
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 93.6 $ 76.1
Current portion of long-term debt 13.0 14.6
Deferred revenue 72.5 58.2
Current portion of self-insurance reserves 34.5 56.1
Accrued expenses and other current liabilities   117.9   137.1
Total current liabilities 331.5 342.1
Long-term debt, net 1,141.3 1,574.9
Deferred tax liabilities 67.2 125.1
Self-insurance reserves 93.4 66.5
Other liabilities   31.2   53.7
Total liabilities   1,664.6   2,162.4
Stockholders' equity:

Preferred stock, $0.01 par value; 50 shares authorized; no shares
issued or outstanding as of September 30, 2018 and September 30,
2017

Common stock, $0.01 par value; 500 shares authorized; 104 and 77
shares issued and outstanding as of September 30, 2018 and
September 30, 2017, respectively

1.0 0.8
Additional paid-in-capital 1,426.3 894.1
Accumulated deficit (189.6 ) (178.0 )
Accumulated other comprehensive loss   (10.4 )   (20.6 )
Total stockholders' equity   1,227.3   696.3
Total liabilities and stockholders' equity $ 2,891.9 $ 2,858.6
 

(*) Amounts may not total due to rounding.

 
       

BrightView Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

 
 
Three Months Ended Twelve Months Ended

September 30,

2018

   

September 30,

2017

September 30,

2018

   

September 30,

2017

(in millions)*
Net service revenues $ 581.8 $ 567.0 $ 2,353.6 $ 2,225.9
Cost of services provided   416.1   408.8   1,727.5   1,629.7
Gross profit 165.7 158.2 626.1 596.1
Selling, general and administrative expense 124.3 104.5 481.2 435.5
Amortization expense   15.3   31.0   104.9   125.8
Income from operations 26.0 22.7 40.0 34.9
Other (expense) income (24.8 ) 0.5 (23.5 ) 1.8
Interest expense   20.3   24.7   97.8   98.1
Loss before income taxes (19.0 ) (1.6 ) (81.3 ) (61.5 )
Income tax benefit   8.1   2.0   66.2   24.0
Net (loss) income $ (10.9 ) $ 0.4 $ (15.1 ) $ (37.4 )
Loss per share:
Basic and Diluted $ (0.11 ) $ 0.01 $ (0.18 ) $ (0.49 )
 
 

BrightView Holdings, Inc.

Segment Reporting

(Unaudited)

 
 
    Three Months Ended     Twelve Months Ended

September 30,

2018

   

September 30,

2017

September 30,

2018

   

September 30,

2017

(in millions)*
Maintenance Services $ 433.4 $ 418.6 $ 1,774.8 $ 1,651.8
Development Services 149.7 149.9 583.3 577.2
Eliminations   (1.3 )   (1.4 )   (4.5 )   (3.1 )
Net Service Revenues $ 581.8 $ 567.0 $ 2,353.6 $ 2,225.9
Maintenance Services $ 79.6 $ 76.8 $ 289.8 $ 258.0
Development Services 23.4 18.0 78.7 77.4
Corporate   (18.8 )   (15.1 )   (68.4 )   (68.8 )
Adjusted EBITDA $ 84.2 $ 79.7 $ 300.1 $ 266.6
Maintenance Services 11.8 6.6 45.5 47.4
Development Services 0.9 1.9 4.9 6.2
Corporate   2.0   1.4   36.0   7.3
Capital Expenditures $ 14.7 $ 9.9 $ 86.4 $ 60.9
 

(*) Amounts may not total due to rounding.

 
 

BrightView Holdings, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 
 
    Twelve Months Ended

September 30,

2018

   

September 30,

2017

(in millions)*
Cash flows from operating activities:
Net loss $ (15.1 ) $ (37.4 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation 75.3 77.7
Amortization of intangible assets 104.9 125.8
Amortization of financing costs and original issue discount 10.4 10.1
Loss on debt extinguishment 25.1
Deferred taxes (63.4 ) (51.0 )
Equity-based compensation 28.8 2.9
Hedge ineffectiveness and realized loss 9.8 15.3
Provision for doubtful accounts 0.9 2.7
Other non-cash activities, net 0.6 (1.1 )
Change in operating assets and liabilities:
Accounts receivable 25.2 (25.7 )
Unbilled and deferred revenue 2.6 (14.1 )
Inventories 1.7 7.0
Other operating assets (16.6 ) (4.1 )
Accounts payable and other operating liabilities   (9.9 )   16.3
Net cash provided by operating activities   180.4   124.2
Cash flows from investing activities:
Purchase of property and equipment (86.4 ) (60.9 )
Proceeds from sale of property and equipment 12.0 7.0
Business acquisitions, net of cash acquired (104.4 ) (53.8 )
Other investing activities, net   (0.5 )   2.6
Net cash used in investing activities   (179.3 )   (105.1 )
Cash flows from financing activities:
Repayments of capital lease obligations (6.3 ) (4.7 )
Repayments of debt (1,662.6 ) (184.5 )
Proceeds from term loan, net of financing costs 1,016.9
Proceeds from issuance of common stock, net of share issuance costs 501.3 150.0
Proceeds from receivables financing agreement 115.0
Proceeds from revolving credit facility 60.0
Repurchase of common stock and distributions   (2.9 )   (3.0 )
Net cash provided by (used in) financing activities   21.3   (42.1 )
Net change in cash and cash equivalents 22.4 (22.9 )
Cash and cash equivalents, beginning of period   12.8   35.7
Cash and cash equivalents, end of period $ 35.2 $ 12.8
 

(*) Amounts may not total due to rounding.

 
 

BrightView Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

 
 
    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
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
 

(*) Amounts may not total due to rounding.

 
 

BrightView Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)
 
 
(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.
 
(*) Amounts may not total due to rounding.
 

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