Q1 2022 Brightview Holdings Inc Earnings Call
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Speaker 1: Hello and welcome to today's Brightview Holdings Incorporated first quarter fiscal 2022 results conference call. My name is Bailey and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star followed by one on your telephone keypad.
Hello, and welcome to today's bright few holdings incorporated first quarter fiscal 2022 results Conference call. My name is daily and that will be the moderator for todays call all lines will be muted during the presentation portion of the cool with an opportunity for questions and answers at the end.
If you would like to ask a question. Please press star followed by one on your telephone keypad I would now like to pass the conference over to our host John Shave Vice President of Investor Relations. John . Please go ahead.
Speaker 1: I would now like to pass the conference over to our host, John Shave, Vice President of Investor Relations. John , please go ahead.
Thank you Billy and good morning, before we begin I'd like to remind listeners that some of the comments made today, including responses to questions and information reflected on the presentation was.
Speaker 2: Thank you, Bailey, and good morning. Before we begin, I'd like to remind listeners that some of the comments made today, including responses to questions and information reflected on the presentation slides, are forward-looking, and actual results may differ materially from those projected.
Forward looking and actual results may differ materially from those projected.
Speaker 2: Please refer to the company's SEC filings for more detail on the risks and uncertainties.
Please refer to the company's SEC filings for more detail on the risks and uncertainties that could impact the company's future operating results and financial condition.
Speaker 2: that can impact the company's future operating results and financial...
Speaker 2: Comments made today will also include a discussion of certain non-GAAP financial measures.
Comments made today will also include a discussion of certain non-GAAP financial measures.
Speaker 2: reconciliation to comparable GAAP financial measures are provided in today's presentation.
Reconciliations to comparable GAAP financial measures are provided in today's press release disclaimers on forward looking statements and non-GAAP financial measures apply both to today's prepared remarks as well as the Q&A.
Speaker 2: on forward-looking statements and non-GAAP financial measures, applied both to today's prepared marks as well as the Q&A.
Speaker 2: I'll now turn the call over to Brightview's CEO , Andrew Maslow.
I'll now I'll now turn the call over to <unk> CEO Andrew Masterman.
Speaker 3: Thank you, John . Good morning, and thanks to all of you for joining us.
Thank you John .
Morning, and thanks to all of you for joining us.
Speaker 3: I am particularly happy to be with you all today as it is snowing heavily in many parts of the country.
I'm, particularly happy to be with you all today as it is snowing heavily in many parts of the country well snow removal continues in the northeast following the storm last weekend.
Speaker 3: As you know, our results during the winter are meaningfully impacted by snowfall. So while the current weather can't help us with our first fiscal quarter, it's a great start to Q2 with almost twice as much snow in January of 2022 versus the prior two Januarys, and we're very happy to have it.
As you know our results during the winter are meaningfully impacted by snowfall. So when the current weather can help us with our first fiscal quarter. It's a great start to Q2 was almost twice as much snow in January of 2022 versus the prior to January and we're very happy to have it.
Speaker 3: And any strength in Q2 snow will build upon a very positive trend that we've seen over the last several quarters and which continued in Q1 2022. That trend is solid organic growth in the core of our company, our maintenance land business.
Any strength in Q2, so we will build upon a very positive trend that we've seen over the last several quarters and which continued in Q1 2022.
That trend is solid organic growth in the core of our company our maintenance land business.
Speaker 3: We are pleased to continue our excellent momentum this quarter with strong maintenance land organic growth of 7.3% with Q1 revenue reflecting a return to above 2019 levels. We expect this performance to continue.
We are pleased to continue our excellent momentum this quarter with a strong maintenance land organic growth was seven 3% with Q1 revenue, reflecting a return to above 2019 levels. We expect this performance to continue.
Strong execution by our maintenance land organization delivered $3 $2 million of incremental EBITDA $40 million of increased revenue. This result is primarily driven by exceptional labor and material management, and our organic business offset by fuel escalation and for maintenance.
Speaker 3: Strong execution by our maintenance land organization delivered $3.2 million of incremental EBITDA on $40 million of increased revenue. This result is primarily driven by exceptional labor and material management in our organic business, offset by fuel escalation, and from maintenance service lines that we acquired from recent development M&A transactions that were not a focal point of those development processes.
Service lines that we acquired from recent development M&A transactions that we're not a focal point of those development businesses.
We are optimistic this will improve in the second half of fiscal 2022.
Speaker 3: We are optimistic this will improve in the second half of fiscal 2022.
These trends are a result of the culture, we have built and the commitment of our entire organization from gardeners to leadership team, who are all delivering excellent services to our customers I am so incredibly proud of the breakthrough team.
Speaker 3: These trends are a result of the culture we have built and of the commitment of our entire organization, from gardeners to leadership team, who are all delivering excellent services to our customers. I am so incredibly proud of the Brightview team. Let me begin by...
Let me begin by reviewing the highlights from the quarter.
First I am pleased to report another solid quarter revenue growth led by seven 3% in maintenance land organic growth.
Speaker 3: First, I am pleased to report another solid quarter revenue growth led by 7.3% maintenance land organic growth. Continued expansion of our contract business as well as a rebound in ancillary services penetration is a result of the investments we are making in our expanded sales team and sales enablement technology.
Continued expansion of our contract business as well as a rebound in ancillary services penetration as a result of the investments we are making and our expanded sales team and sales enablement technologies.
Speaker 3: This follows Q4 of fiscal year 2021 in which we grew organically 9% plus and fiscal Q3 in which we grew organically 11% plus. In short, we have grown from fiscal 2019 organic revenue levels despite operating in an environment presented with continued challenges.
This follows Q4 fiscal year 2021 in which we grew organically, 9% plus and fiscal Q3 in which we grew organically 11% plus.
In short we have grown from fiscal 2019 organic revenue levels. Despite operating in an environment presented with continued challenges.
Speaker 3: Second, adjusted EBITDA for the quarter was $42.6 million, down 18.7%, or $9.8 million compared to the prior year. The decline was driven principally by significantly lower snowfall across Brightview's branch footprint, which pressured our top line and profitability in the quarter.
Adjusted EBITDA for the quarter was $42 6 million down 18, 7% or $9 $8 million compared to the prior year.
The decline was driven principally by significantly lower snowfall across bright news branch footprint, which pressured our top line and profitability in the quarter.
Speaker 3: Assuming an average snowfall during the quarter, our adjusted EBITDA performance would have been towards the higher end of the guidance range provided during our fourth quarter call.
Assuming an average snowfall during the quarter, our adjusted EBITDA performance would have been towards the higher end of the guidance range provided during our fourth quarter call.
Speaker 3: The lower end of our adjusted EBITDA guidance range contemplated low snowfall. And in our primary snow markets, we did not see any measurable snowfall.
The lower end of our adjusted EBITDA guidance range contemplated low snowfall.
And in our primary U snow markets, we did not see any measurable snowfall.
Speaker 3: Given that we are largely able to provide snow services with our existing fixed cost structure, the impact of low snow revenue, particularly given the geography is impacted, we estimate was a $7.5 million reduction to adjusted EBITDA in the quarter. We will discuss this.
Given that we are largely able to provide those services with our existing fixed cost structure.
The impact of low sell revenue, particularly given the geographies impacted we estimate was a $7 5 million reduction to adjusted EBITDA in the quarter.
We will discuss this in more detail later.
Third our total consolidated adjusted EBITDA margin of seven 2% was impacted by lower snowfall totals higher materials costs in our development segment <unk> expense across the organization within these results is outstanding labor and material management by our maintenance team minimizing margin impact.
Speaker 3: Third, our total consolidated adjusted EBITDA margin of 7.2% was impacted by lower snowfall totals, higher materials costs in our development segment, and fuel expense across our organization. Within these results is outstanding labor and material management by our maintenance team minimizing margin impact.
Speaker 3: To offset forecast inflationary pressure, we have implemented a price increase initiative that should benefit the second half of the year.
To offset forecasted inflationary pressure, we have implemented a price increase initiative that should benefit the second half of the year.
Speaker 3: Fourth, the results of our strong on strong acquisition strategy benefited our revenue growth by $39.7 million during the first quarter. Unlike other quarters, acquired revenue was heavily weighted to our development segment.
Fourth the results of our strong on strong acquisition strategy benefited our revenue growth by $39 $7 million during the first quarter. Unlike other quarters acquired revenue was heavily weighted to our development segment.
Speaker 3: We also completed a key strategic acquisition that strengthens our presence in the high growth work.
We also completed a key strategic acquisition strengthens our presence in a high growth market.
And finally, we announced the $250 million share repurchase program and in January completed the repurchase of $5 9 million shares from MSP partners at a purchase price of $13 98.
Speaker 3: And finally, we announced the $250 million shareport repurchase program and in January completed the repurchase of 5.9 million shares from MSD partners at a purchase price of $13.98.
Speaker 3: The repurchase represented half of MSD's investment in Brightview. The share repurchase authorization does not affect our previously stated and ongoing mergers and acquisition strategy.
The repurchase represented half of MSB is investment in bright view the share repurchase authorization does not affect our previously stated and ongoing mergers and acquisition strategy. We expect to continue repurchases on an ongoing basis for the pursuit foreseeable future.
Speaker 3: We expect to continue repurchases on an ongoing basis for the foreseeable future.
Before we turn to the details of our first quarter. Let me provide you with our outlook for our second quarter of fiscal year 2022 on slide five.
Speaker 3: Before we turn to the details of our first quarter, let me provide you with our outlook for our second quarter of fiscal year 2022 on slide 5.
Our maintenance land contract based business is growing and demand for ancillary services is improving we are encouraged by what we see happening in the market and believe this will result in another quarter of maintenance land organic growth of 4% or more.
Speaker 3: Our maintenance land contract based business is growing and demand for ancillary services is improving. We are encouraged by what we see happening in the market and believe this will result in another quarter of maintenance land organic growth of 4% or more.
Speaker 3: The positive momentum in Q1 maintenance land should continue into Q2, and we will deliver incrementally with the from both organic and M&A revenue.
The positive momentum in Q1 maintenance land shouldn't continue into Q2, and we will deliver incremental EBITDA from both organic and M&A revenue.
Speaker 3: Snow removal services is the largest variable in our second fiscal quarter, and we are optimistic about our ability to deliver solid results.
Snow removal services is the largest variable in our second fiscal quarter and we are optimistic about our ability to deliver solid results.
Speaker 3: In our development segment, we were encouraged by the backlog trends we have previously discussed. Because of this, we are forecasting approximately 5% organic revenue growth in Q2, as well as more than 5% revenue growth from M&A. The market pressure we have seen from material inflation will continue, but at a less thaning rate.
And our development segment, we are encouraged by the backlog trends. We have previously discussed because of this we are forecasting approximately 5% organic revenue growth in Q2, as well as more than 5% revenue growth from M&A.
The market pressure, we have seen from material inflation will continue but at a lessening right.
Speaker 3: Looking forward in development, one external tracker we monitor is the architecture buildings index. The ABI is an economic indicator for non-residential construction activity with a lead time of approximately 9 to 12 months.
Looking forward in development, one external tracker, we monitor is the architecture billings index, the Abi as an economic indicator for nonresidential construction activity with a lead time of approximately nine to 12 months.
Speaker 3: The ABI ended 2021 on a hideout as billings increased almost every month of 2021.
The Abi ended 2021 on a high note as billings increased almost every month of 2021.
Speaker 3: This architectural activity drives our pipeline of work and is tracking across all markets, evidenced by increasing backlog across the enterprise. As a result, we remain optimistic that modest organic growth trends in the development segment should continue throughout fiscal 2022 and into fiscal 2023.
This architectural activity drives our pipeline of work and is tracking across all markets evidenced by increasing backlog across the enterprise.
As a result, we remain optimistic that modest organic growth trends in the development segment should continue throughout fiscal 2022 and into fiscal 2023.
Speaker 3: As such, for our second quarter fiscal 2022, we anticipate total revenues between $620 million and $680 million and adjusted EBITDA between $50 million and $60 million.
As such for our second quarter fiscal 2022, we anticipate total revenues between 620 and $680 million and adjusted EBITDA between 50 and $60 million.
The low end of the guidance assumes lifestyle fault and the high end assumes average snowfall.
Speaker 3: The low end of the guidance assumes light snowfall and the high end assumes average snowfall.
Moving now to slide six as you can see here, we have delivered a consistent level of significant M&A and fiscal 2022 is off to a promising start.
Speaker 3: Moving now to slide six, as you can see here, we have delivered a consistent level of significant M&A and fiscal 2022 is off to a promising start.
Speaker 3: During the quarter, we welcome a performance landscape to the Brightview family. Performance was founded in 2002 and operates on the island of Oahu, Maui, and Kauai from the main office in Honolulu. Kauai's landscapes are renowned for their beauty and cultural significance. And performance provides a full suite of landscape maintenance and enhancements, treat care and irrigation services.
During the quarter, we welcome and performance landscape to the bright view family performance was founded in 2002 and operates on the island of Oahu, Maui and Hawaii from their main office in Honolulu.
Hawaii's landscapes are renowned for their beauty and cultural significance.
Performance provides a full suite of landscape maintenance and enhancements trickier and irrigation services.
The organization is 110, plus trained and <unk> personnel and an established culture of safety.
Speaker 3: The organization has 110 plus trained and e-verified personnel and an established culture of safety.
Performance as the service leader in the Honolulu, Oahu market and provides a breakthrough with a strong foothold in Hawaii.
Speaker 3: performance is the service leader in the Hanalu Wahu market and provides bright view with a strong foothold in Hawaii.
Speaker 3: The company has an attractive operating and performance track record and serves clients across the homeowner association, high end residential, commercial and private military housing market segment.
The company has an attractive operating and performance track record and serves clients across the homeowner Association high end residential commercial and private military housing market segments.
Bright new development services has been a licensed landscape and irrigation contractor in Hawaii. Since 2008. In addition to renovating the four seasons and Kona following the tsunami in 2011 development services restored the irrigation system for the Hilton <unk> village resort and perform landscaping architecture work as a four seasons resort Maui.
Speaker 3: Brightview Development Services has been a licensed landscape and irrigation contractor in Hawaii since 2008. In addition to renovating the four seasons in Kona following a tsunami in 2011, development services restored the irrigation system for the Hilton-Weikolo village in Resort and performed landscaping architecture work at the four seasons Resort Mally.
Speaker 3: Right View is excited to add maintenance services to its existing development capabilities on the app.
Great view is excited to add maintenance services to its existing development capabilities on the islands.
Speaker 3: In addition to our organic growth, we have grown and expected to continue to grow our business through acquisitions. To better service our existing customers and to attract new customers.
In addition to organic growth, we have grown and expect to continue to continue to grow our business through acquisitions to better service, our existing customers and to attract new customers.
Speaker 3: M&A is a critical aspect of our strategy and a proxy for organic growth.
M&A is a critical aspect of our strategy and our proxy for organic growth.
Moving now to slide seven our strong on strong acquisition strategy is focused on increasing our density in leadership positions and existing local markets entering attractive new geographic markets and expanding our portfolio of landscape enhancement enhancement services and improving technical capabilities and specialized services we believe.
Speaker 3: Moving now to slide seven, our strong, strong acquisition strategy is focused on increasing our density and leadership positions in existing local markets, entering attractive new geographic markets, and expanding our portfolio of landscape and enhancement services, and improving technical capabilities and specialized services.
Speaker 3: We believe we are the acquirer of choice in the highly fragmented commercial landscaping industry because we improve great businesses after we acquire them.
We are the acquirer of choice in the highly fragmented commercial landscaping industry, because we improve great businesses. After we acquire them.
Bright view offers the ability to leverage our significant size and scale first centralized procurement and buying power trucks trailers, my worries handheld equipment or buying power is undisputable.
Speaker 3: Brightview offers the ability to leverage our significant size and scale. First, centralized procurement and buying power, trucks, trailers, mowers, handheld equipment, our buying power is undisputable. Second, the customer experience...
Second the customer experience and productivity tools.
Starting with our CRM and existing platforms to our customer portals bright view connect in HOA connect to our mobile quality site assessment application.
Speaker 3: Starting with our CRM and existing platforms to our customer portals, BrightView Connect and HWA Connect to our mobile quality side assessment application. Our field associates have the tools to maximize the customer experience with improved ancillary penetration leading to margin enhanced.
Our field associates have the tools to maximize the customer experience with improved ancillary penetration leading to margin enhancement.
Third our digital marketing tools and strategies and channels lead to greater awareness and more impactful messaging, resulting in more valuable leads and higher opportunity pipeline.
Speaker 3: Third, our digital marketing tools, strategies and channels lead to greater awareness and more impactful messaging resulting in more valuable leads and higher opportunity pipeline dollars.
And fourth safety and training throughout the employee lifecycle brightening provides stable and potentially expanding career opportunities and we take pride in our industry, leading safety programs in 2021 over half of our branches went without one single industry.
Speaker 3: And fourth, safety and training throughout the employee lifecycle. Brightview provides stable and potentially expanding career opportunities. And we take pride in our industry leading safety programs. In 2021, over half of our branches went without one single in.
Speaker 3: Since 2017, we have completed dozens of acquisitions that positioned us as market leaders in several key MSAs. We have a dedicated team and a disciplined and repeatable framework. Our acquisitions are creative and a value creating use of free cash flow. Our strong and strong M&A strategy leverages our scalable infrastructure while building our best in class platforms, processes, and people.
Since 2017, we have completed dozens of acquisitions have positioned us as market leaders in several key msas, we have a dedicated team and a disciplined and repeatable framework, our acquisitions are accretive and value, creating use of free cash flow our strong on strong M&A strategy Leverages, our scalable infrastructure, while building a best in class.
<unk> platforms processes and people are M&A success this quarter, our topline growth and we will continue to deliver as we execute on transactions and the strategy, we have developed and deployed over the last five years.
Speaker 3: Our M&A success is core to our top-line growth, and we will continue to deliver as we execute on transactions and the strategy we have developed and deployed over the last five years.
Turning now to slide eight the largest variable to our first quarter and second quarter financial performance as snow removal services.
Speaker 3: Turning now to slide eight, the largest variable to our first quarter and second quarter financial performance is no removal service.
Notably the United States. So its fourth warmest year in 2021 fueled by the warmest December on record and this impacted snowfall totals in key markets.
Speaker 3: Notably, the United States saw its fourth warmest year in 2021, fueled by the warmest December on record, and its impact is still fall totals in KEMAR.
According to NOAA snowfall totals in inches specific to break views geographic footprint were down 59% versus prior year at 56% over the historical 30 year average.
Speaker 3: According to NOAA, Snowfall totals and inches, specific to bright-view geographic footprint, were down 59% versus prior year, at 56% of the historical 30-year average.
Stone removal services revenue of $36 million was down 43% or $24 million on an organic basis.
Speaker 3: Our snow removal services revenue of $36 million was down 43% or $24 million on an organic basis offset by $4.2 million of acquired snow revenue during the quarter.
<unk> by $4 $2 million of acquired revenue during the quarter.
Speaker 3: Weather works, the industry standard for our customer contracts for billing and invoicing purposes. Reporting snowfall totals in inches mapped to our specific branch footprint were down almost 73% versus the prior year.
Whether works the industry standard for our customer contracts for billing and invoicing purposes reported snowfall totals in inches mapped to our specific branch footprint, we're down almost 73% versus the prior year.
Speaker 3: Let me give you a few year-to-year weather work specifics on our largest snow markets in the region.
Let me give you a few year to year, whether were specifics on our largest steel markets and regions Denver, a historically strong and consistent snow removal market recorded approximately $2 three inches of snow during the quarter versus approximately $19 six inches in the prior year.
Speaker 3: Denver, a historically strong and consistent snow removal market, recorded approximately 2.3 inches of snow during the quarter versus approximately 19.6 inches in the prior year.
Speaker 3: Chicago recorded approximately 2.7 inches of snow down 39% versus prior to.
Chicago recorded approximately $2 seven inches of snow down 39% versus prior year.
And in our northeast region snowfall was less than one inch down 91% versus prior year, and we will realized no snow in the mid Atlantic region. During the first fiscal quarter of 2022.
Speaker 3: And in our northeast region, snowfall was less than 1 inch, down 91% versus prior year. And we realized no snow in the mid-Atlantic region during the first fiscal quarter of 2022.
Speaker 3: Keep in mind, snow margin is driven by many factors, including when, where, how, how much, and how often, it snowes and will change every year.
Keep in mind snow margin is driven by many factors, including when where how how much and how often it snows and will change every year.
Despite significantly lower snowfall in our first fiscal quarter versus last year snowfall totals in January of 2022 were at historical averages and twice 2020 in 2021. This drives our optimism that snowfall totals specific to break news branch footprint during our second fiscal quarter will be near 10, and 30 year historical averages I assume.
Speaker 3: Despite significantly less snowfall on our first fiscal quarter versus last year, snowfall totals in January of 2022 were at historical averages and twice 2020 and 2021. This drives our optimism that the snowball totals specific to Brightview's branch footprint during our second fiscal quarter will be near 10 and 30 year historical averages assuming February and March continue this trend.
In February and March continue this trend.
Speaker 3: Turning to slide nine, we continue to be leaders in environmental, social, and corporate governance, or ESG. We truly embrace our ESG strategy and it is embedded into our corporate foundation and hopefully there will be progress in the future.
Turning to slide nine we continue to be leaders in environmental social and corporate governance or ESG, we truly embrace our ESG strategy and it is embedded into our corporate foundation and culture.
Speaker 3: As a company that designs, creates, maintains, and enhances commercial landscapes across the country, sustainability is central to bright-views branching corporate purpose. In fact, environmental and social responsibility and corporate governance has been integral to our company since our founding.
As a company that designs creates maintains and enhances commercial landscapes across the country sustainability is central to bright news branch and corporate purpose in fact, environmental and social responsibility and corporate governance has been integral to our company since our founding we will publish an inaugural ESG report next week.
Speaker 3: We will publish an inaugural ESB report next week and are committed to regular, transparent communication and intend to continue providing updates on our progress.
And are committed to regular transparent communication and intend to continue providing updates on our progress.
Speaker 3: Since this will be our inaugural report, let me take a few minutes to review our ESF East Predator.
Since this will be our inaugural report let me take a few minutes to review our ESG strategy.
Our commitment to environmental social and governance practices and progress starts at the top with our board of Executive Board of directors and executive team.
Speaker 3: Our commitment to environmental, social, and governance practices and progress starts at the top with our Board of Executive Directors and Executive P.
And it's a source of pride for every member of our team who bring our commitment to life each day.
Speaker 3: And it's a source of pride for every member of our team who bring our commitment to life each day.
Speaker 3: At Brightview, we are committed to embracing environmentally responsible practices and making progress towards carbon neutrality.
A bright view.
We're committed to embracing and environmentally responsible practices and making progress towards carbon neutrality.
Striving to take care of all team members by providing a safe inclusive diverse and engaging work environment.
Speaker 3: striving to take care of all team members by providing a safe, inclusive, diverse, and engaging working bar.
Speaker 3: dedicating time and resources to improve the communities where we live, work, and play, and maintaining the highest standard of ethics and death.
Dedicating time and resources to improve the communities, where we live work and play.
And maintaining the highest standards of ethics and values.
Speaker 3: Turning this like 10, let me provide you with some insight regarding our environmentally responsible crack.
Yes.
Turning to slide 10.
Let me provide you with some insight regarding our environmentally responsible practices.
To reduce our energy and emissions, we are expanding our fleet of energy efficient vehicles, adopting next generation fuel tracking technology and offering the use of alternative fertilizers.
Speaker 3: To reduce our energy and emissions, we are expanding our fleet of energy-efficient vehicles, adopting next-generation fuel-tracking technology, and offering the use of alternative fertilizers.
We are also adapting strategies and next generation equipment to help our clients reduce their carbon footprint and meet LEED certification standards.
Speaker 3: We're also adopting strategies and next generation equipment to help our clients reduce their carbon footprint and meet lead certification standards.
Speaker 3: Our commitment to carbon neutrality by eliminating carbon from our operations represents our biggest opportunity to reduce corporate risk, contribute to a healthy environment and be the leader in our industry. Our goal is to reduce our carbon consumption by 90% and become carbon neutral by 2035.
Our commitment to carbon neutrality by eliminating carbon from our operations represents our biggest opportunity to reduce corporate risk contribute to a healthy environment and be the leader in our industry. Our goal is to reduce our carbon consumption by 90% and become carbon neutral by 2035.
Speaker 3: We have a five-pronged approach to achieving our carbon neutrality goal. First, stewardship. We're actively engaging with industry and suppliers to lead a transformation towards our environmental goals. Sustainability. We're helping to sequester carbon by planting trees and through sustainable design and maintenance of land.
We have a five pronged approach to achieving our carbon neutrality goal.
Stewards stewardship, we're actively engaging with industry and suppliers to lead a transformation towards our environmental goals sustainability, we're hoping to sequester carbon by planting trees and through sustainable design and maintenance of landscapes.
Speaker 3: a cleaner fleet. We're converting our fleet of 11,000 vehicles with electric and hybrid alternatives.
A cleaner fleet okay.
We're converting our fleet of 11000 vehicles with electric and hybrid alternatives.
Speaker 3: We plan to convert approximately 35,000 pieces of two cycle power equipment to rechargeable energy sources by 2025, resulting in a greater than 50% reduction in bright-use total carbon footprint.
Greener equipment, we plan to convert approximately 35000 pieces of two cycle power equipment to rechargeable energy sources by 2025, resulting in a greater than a 50% reduction in bright news total carbon footprint.
Speaker 3: efficient buildings. In the 300 properties we currently own or lease, we are replacing outdated equipment and appliances with energy efficient alternatives.
Efficient buildings and the 300 properties, we currently own or lease, we're replacing outdated equipment and appliances with energy efficient alternatives, where possible, we intend to convert electrical power to our buildings with alternative energy sources and we are planning to pilot. These measures at one of our branches in 2022.
Speaker 3: where possible, we intend to convert electrical power to our buildings with alternative energy sources, and we are planning to pilot these measures at one of our branches in 2022.
Not only this will be significant for our company and for the environment, but by and integrating green energy into our operations, we anticipate decreasing our equipment maintenance costs by upwards of 50% annually.
Speaker 3: Not only this will be significant for our company and for the environment, but by integrating green energy into our operations, we anticipate decreasing our equipment maintenance costs by upwards of 50% annually.
Turning now to slide 11.
Speaker 3: Let me provide you with an insight regarding our efforts to create a socially responsible, great place to work.
Let me provide you with some insight regarding our efforts to create a socially responsible great place to work.
Speaker 3: At Brightview, we provide a safe, inclusive, and engaging workplace where talented people come to work and advance their careers. Got it by our people strategy, we're working to attract, hire, engage, develop, reward, and retain top talent.
And bright view, we provided a safe inclusive and engaging workplace with talented people come to work and advance their careers.
By our people strategy, we're working to attract higher engage develop reward and retain top talent with an emphasis on ongoing improvement we continue to assess our programs and meet the evolving needs of our teams and the organization as a growing company a key area of focus for US is fostering a positive inclusive company culture, which everyone's voice.
Speaker 3: With emphasis on ongoing improvement, we continue to assess our programs and meet the evolving needs of our teams and the organization.
Speaker 3: As a growing company, a key area of focus for us is fostering a positive, inclusive company culture in which everyone's voice is heard.
This is herb.
Speaker 3: Bright news committed to attracting, developing and retaining. Best in class leaders and professionals in the industry.
<unk> is committed to attracting developing and retaining best in class leaders and professionals in the industry. In 2020, we launched <unk> University, our employee development program, which offers courses tailor made for different positions within our company from landscapers to business development professionals.
Speaker 3: In 2020, we launched Right View University, our Employee Development Program, which offers courses tailor-made for different positions within our company, from landscapers to business development professionals.
Through this program all team members can receive relevant and accessible training to build their skills.
Speaker 3: Through this program, all team members can receive relevant and accessible training to build their skills.
In 2021, we began providing additional management technical and leadership development courses to our employees through the <unk> Library online learning program.
Speaker 3: In 2021, we began providing additional management, technical and leadership development courses to our employees through the BIS library online learning program.
Speaker 3: key to social responsibility is building a diverse and inclusive culture. To make all teams members feel welcome and valued, we are working to increase the diversity of our workforce and investing in initiatives that provide equal opportunities to employees and candidates. s
A key to social responsibility is building a diverse and inclusive culture to make all team members feel welcome and valued we are working to increase the diversity of our workforce and investing in initiatives that provide equal opportunities to employees and candidates of all backgrounds.
We continue to strengthen our diversity and inclusion strategy. We recognize the most important thing we can do is listen and learn.
Speaker 3: Well, we continue to strengthen our diversity and inclusion of strategy. We recognize the most important thing we can do is listen and learn.
Turning to slide 12, as it relates to corporate governance, we are dedicated to maintaining the highest standards of business integrity and ethical conduct adherence to sound principles of corporate governance for a system of checks and balances and personable accountability is vital to protecting breakthroughs reputation assets investor confidence and customer loyalty.
Speaker 3: Train to slide 12 as it relates to corporate governance. We are dedicated to maintaining the highest standards of business integrity and ethical conduct. Adherence to sound principles of corporate governance for a system of checks, balances, and personal accountability is vital to protecting right-use reputation, assets, investor confidence, and customer loyalty.
Starting at the top our board of Directors now has an average tenure of less than four years and reflects our commitment to diversity three of our seven independent directors are considered to be diverse up from zero three years ago.
Speaker 3: Starting at the top, our board of directors now has an average tenure of less than four years and reflects our commitment to diversity. Three of our seven independent directors are considered to be diverse, up from zero three years ago.
Speaker 3: Another example of our strong governance is our commitment to compliance. Because Breitview relies on many seasonal workers ensuring that our employees can work in the United States legally is important to both to us and our customers.
Another example of our strong governance is our commitment to compliance because brightly relies on many seasonal workers ensuring that our employees can work in the United States legally is important both to us and our customers.
Speaker 3: E-Verify is a web-based system that allows bright views to confirm the eligibility of our employees to work in the United States. As an E-Verify employer, we can verify the identity and employment eligibility of newly hired employees by electronically matching information provided by employees against records available to the Department of Homeland Security.
<unk> is a web based system that allows bright view to confirm the eligibility of our employees to work in the United States as an E. Verify employer, we can verify the identity unemployment eligibility of newer newly hired employees by electronically matching information provided by employees against records available to the department.
<unk> of Homeland security.
Speaker 3: Well, E-Verify is a voluntary program right for you to be the only landscaping company that utilizes the program in every state in which we are.
Well <unk> is a voluntary program breakthrough is proud to be the only landscaping company that utilizes the program in every state in which we operate.
Brian recognizes that prioritizing ESG is an essential component to meeting the needs of all our stakeholders our board in collaboration with the leadership teams direction overseas ESG strategies establishes relevant policies and practices and monitor progress and performance.
Speaker 3: Right be recognizes that prioritizing ESG is an essential component to meeting the needs of all our stakeholders.
Speaker 3: our board in collaboration with the leadership teams, direction overseas, ESP strategies, establishes relevant policies and practices and monitors progression performance.
I'll now turn it over to John who will discuss our financial performance in greater detail.
Speaker 3: I'll now turn it over to John who will discuss our financial performance in greater detail. Thank you.
Thank you Andrew and good morning to everyone let.
Speaker 3: Let me start by reiterating some key highlights for Q1 of fiscal 2020.
Let me start by reiterating some key highlights for Q1 for fiscal 2022.
Speaker 4: First, we achieved maintenance land organic growth of 7.3%, a third consecutive quarter of solid organic.
First we achieved maintenance land organic growth of seven 3%.
Third consecutive quarter of solid organic growth.
Speaker 4: Second, we had improved labor and material management in the maintenance phase.
Second we had improved labor and material management and the maintenance segment.
Speaker 4: And third, while still challenged, the development segment had a sequential quarter to quarter improvement from the impact of material cost inflation. And fourth, outside of our CARES Act repayment within the quarter, we continue to generate solid cash in our head of our plan for Q1.
And third while still challenged the development segment had a sequential quarter to quarter improvement from the impact of material cost inflation and four outside of our cares Act repayment within the quarter. We continued to generate solid cash and are ahead of our plan for Q1.
As a firm we remain laser focused on our key investment pillars of organic growth.
Speaker 4: As a firm, we remain laser focused on our key investment pillars of organic growth, margin enhancement over time, mergers and acquisitions, and cash generally.
Margin enhancement over time, mergers and acquisitions and cash generation.
Speaker 4: Would that let me now provide a snapshot of our first quarter results?
With that let me now provide a snapshot of our first quarter results.
Moving to slide 15 first fiscal quarter 2022 revenue for the company increased six 7% to $591 $8 million in the current quarter from $554 $4 million in the prior year.
Speaker 4: Moving to slide 15, first fiscal quarter 2022 revenue for the company increased 6.7% to $591.8 million in the current quarter from $554.4 million in the prior year.
Maintenance revenues of $438 2 million for the three months ended December 31.
Speaker 4: Maintenance revenues of $438.2 million for the three months ended December 31st.
Increased by $20 2 million or four 8% from $418 million in the prior year.
Speaker 4: increased by $20.2 million or 4.8% from $418 million in the price.
The increase in maintenance was driven principally by strong contract growth as well as a continued rebound in our ancillary services, which led to seven 3% land organic growth.
Speaker 4: The increase in maintenance was driven principally by strong contract growth, as well as a continued rebound in our ancillary services, which led to 7.3% land organic growth.
Additionally, we realized $17 $8 million of.
Speaker 4: Additionally, we realized $17.8 million of incremental revenue from acquired business.
Rental revenue from acquired businesses.
For the three months ended December 31.
Speaker 4: But the three months ended to December 31st, development revenues increased $17.3 million, or 12.6 percent, to $154.7 million, from $137.4 million in the prior year.
Development revenues increased $17 3 million or 12, 6% to $154 7 million from $137 4 million in the prior year.
Speaker 4: The increase was driven by the $21.9 million contribution from acquired companies.
The increase was driven by the $21 9 million contribution from acquired companies.
Speaker 4: We remain encouraged by our bidding pipeline and bid calendar and we anticipate increased stability during the second half of fiscal 2022.
We remain encouraged by our bidding pipeline and bid calendar and we anticipate increased stability during the second half of fiscal 2022.
Turning to the details on slide 16 total adjusted EBITDA for the first quarter was $42 6 million down.
Speaker 4: Turning to the details on slide 16, total adjusted EBITDA for the first quarter was $42.6 million, down 18.7% or $9.8 million compared to the prior year.
Down 18, 7% or $9 8 million compared to the prior year.
In the maintenance segment adjusted EBITDA of $45 3 million was down eight 7% or $4 $3 million from the prior year.
Speaker 4: In the maintenance segment, adjusted EBITDA of $45.3 million was down 8.7% for $4.3 million from the prior year.
Solid contract growth and a continued rebound in our ancillary services drove a $3 $2 million improvement, which was offset by significantly lower snowfall across our branch footprint.
Speaker 4: solid contract growth and a continued rebound in our ancillary services drove a $3.2 million improvement, which was offset by significantly lower snowfall across our branch footprint.
The snow impact for Q1 was approximately $7 5 million.
Speaker 4: The snow impact for Q1 was approximately $7.5 million.
Assuming normal historical snow, we estimate our Q1 adjusted EBITDA performance would have been $50 $1 million and towards the high end of the guidance range.
Speaker 4: assuming normal historical snow, we estimate our Q1 adjusted evita performance would have been $50.1 million dollars, and towards the high end of the ride guidance range.
More on this shortly.
Speaker 4: Driven by the dynamics just discussed, adjusted even a margin of 10.3%. It was down from 11.9% in the prior years.
Driven by the dynamics just discussed adjusted.
Adjusted EBITDA margin of 10, 3% was down from 11, 9% in the prior year.
Speaker 4: In the development segment, adjusted EBITDA decreased $2.6 million to $14.5 million compared to $17.1 million in fiscal Q1 of 2020.
In the development segment, adjusted EBITDA decreased $2 6 million to $14 5 million.
<unk> to $17 1 million in fiscal Q1 of 2021.
The decline was principally driven by higher material costs as a percentage of revenue.
Speaker 4: The decline was principally driven by higher material costs as a percentage of revenue.
Speaker 4: adjusted EBITDA margin of 9.4% was a reduction compared to the prior year levels of 12.4%.
Adjusted EBIT margin of nine 4% was a reduction compared to the prior year levels of 12, 4%.
For fiscal Q1 corporate expenses represented two 9% of revenue.
Speaker 4: For fiscal Q1, corporate expenses represented 2.9% of revenue.
Let me dive a bit deeper into our snow business and provide additional snow data and metrics that highlight what we feel is a valuable part of the breakthrough story.
Speaker 4: Let me dive a bit deeper into our snow business and provide additional snow data and metrics that highlight what we feel is a valuable part of the BrightDee.
Speaker 4: On slide 17, we show the buildup of our Proformer results, assuming historical 10 and 30 year average snow results.
On slide 17, we show the buildup of our pro forma results, assuming historical 10, and 30 year average snow results.
Speaker 4: This is further refined as we base this on NOAA data over that time, specific to our branch foot.
This is further refined as we base. This on no data over that time specific to our branch footprint.
Speaker 4: We estimate the result would have been adjusted EBITDA of $50.1 million for Q1, which was at the higher end of our guidance.
We estimate the result would have been adjusted EBITDA of $50 1 million for Q1, which was at the higher end of our guidance range.
Let's move now to our balance sheet and capital allocation on slide 18.
Speaker 4: Let's move now to a balance sheet and capital allocation on sliding.
Speaker 4: Net capital expenditures totaled $27.5 million for the quarter ended December 31st, up from $9.1 million in the first quarter of fiscal 2021.
Net capital expenditures totaled $27 5 million for the quarter ended December 31.
Up from $9 $1 million in the first quarter of fiscal 2021.
Expressed as a percentage of revenue net capital expenditures were four 6% in the first fiscal quarter of 2022, and one 6% in fiscal year 2021.
Speaker 4: Expressed is a percentage of revenue, net capital expenditures were 4.6% in the first fiscal quarter of 2022, and 1.6% in fiscal year 20.
Speaker 4: Like many companies, we continue to face supply chain constraints pertaining to our equipment.
Like many companies, we continue to face supply chain constraints pertaining to our equipment orders.
Speaker 4: combined with multiple years of below historical average capital spending and continued growth in the maintenance segment, as discussed last quarter, we continued to anticipate capital expenditures will be approximately 3.5% of revenue for fiscal 2022, which is within our historical guidance.
Find with multiple years of below historical average capital spending and continued growth in the maintenance segment as discussed last quarter. We continue to anticipate capital expenditures will be approximately three 5% of revenue for fiscal 2022, which is within our historical guidance range.
In the first fiscal quarter of 2022, we invested $6 million on acquisitions.
Speaker 4: In the first fiscal quarter of 2022, we invested $6 million on that.
Speaker 4: Net debt on December 31st, 2021 was approximately $1.1 billion flat versus the end of the first fiscal quarter in the prior.
Net debt on December 31, 2021 was approximately $1 1 billion flat versus the end of the first fiscal quarter in the prior year.
Speaker 4: Our leverage ratio was 3.8 times at the end of the first quarter of fiscal 2022, down from four times at the end of the first fiscal quarter of 2020.
Our leverage ratio was three eight times at the end of the first quarter of fiscal 2022.
From four times at the end of the first fiscal quarter of 2021.
Speaker 4: For the first quarter of fiscal year 2022, free cash flow usage was $49.9 million. This was driven by a $33 million year swing from the CARES Act repayment, as well as a strategic increase in capital to support a continued organic growth.
For the first quarter of fiscal year 2022 free cash flow usage was $49 9 million. This was driven by a $33 million year to year swing from the cares Act repayment.
As well as a strategic increase in capital to support our continued organic growth.
An update on liquidity is on slide 19 at the end of the first quarter of fiscal 2022, we had approximately $207 $7 million of availability under our revolver and $132 $8 million of cash on hand.
Speaker 4: An update on liquidity is on slide 19. At the end of the first quarter of fiscal 2022, we had approximately $207.7 million of availability under our revolver, and $132.8 million of cash.
Total liquidity as of December 31, 2021 was approximately $345 million.
Speaker 4: Total liquidity as of December 31st, 2021 was approximately $340.5 million. This compares to $324.2 million as of December 31st, 2020 and provides us with ample flexibility and optionality.
This compares to $324 2 million as of December 31, 2020, and provides us with ample flexibility and optionality.
But before I turn the call over to Andrew for closing remarks on slide 20, I would like to address margin erosion in our development segment.
Speaker 4: Like where I turn the call over to Andrew for closing remarks. On slide 20, I would like to address margin erosion in our development segment. A topic that I suspect continues to be on the minds of many of you on this call.
Topic that I suspect continues to be on the minds of many of you on this call.
Speaker 4: We are in a difficult and inflationary environment, but let me share with you how we are actively mitigating these hits.
We are in a difficult inflationary environment, but let me share with you. How we are actively mitigating these headwinds.
Speaker 4: The main contributors to margin erosion in the development segment were organic revenue declines due to macroeconomic slowdowns in the construction market and increased material costs as a percentage of revenue due to supply chain pressure.
The main contributors to margin erosion in the development segment.
Our organic revenue declines due to macro economic slowdowns in the construction market and increased material costs as a percentage of revenue due to supply chain pressures.
Speaker 4: Other costs, primarily labor, had been effectively managed.
Other costs, primarily labor had been effectively managed.
Speaker 4: Historically, material cost estimates and development bids were honored from the time a bid was submitted until it was accepted through the completion of the project.
Historically material cost estimates and development bids were honored from the time of bid was submitted until it was accepted through the completion of the project.
Speaker 4: Many current development projects were bid on in one 12 to 24 months ago, and we have little flexibility to renegotiate bids after the fact without potentially damaging long-term client release.
Many current development projects were bid on and won 12 to 24 months ago, and we have little flexibility to renegotiate bids after the fact without potentially damaging long term client relationships.
Speaker 4: as we move forward. And as we mentioned in our last call, the development team is shortening the expiration date for the bid price window to 15 days.
As we move forward and as we mentioned in our last call. The development team is shortening the expiration date for the bid price window to 15 days.
Including more specific cost escalation language in bids to provide protection against potential continued inflationary dynamics.
Speaker 4: including more specific cost-discrimination language and bid.
Speaker 4: to provide protection against potential continued inflationary dynamics.
Shifting from a just in time buyer to an advanced purchaser of materials within 15 days of the contract award to reduce the risks associated with future procurement.
Speaker 4: shifting from a just-in-time buyer to an advanced purchaser of materials within 15 days of the contract award to reduce the risks associated with future procurement, and increasing collaboration with vendors to better anticipate material cost trends and expectations.
An increasing collaboration with vendors to better anticipate material cost trends and expectations.
Speaker 4: During the first fiscal quarter of 2022, we witnessed some early indications that we are trending in a positive direct.
During the first fiscal quarter of 2022, we witnessed some early indications that we are trending in a positive direction.
Speaker 4: our adjusted EBITDA margin contraction in Q1 2022 was 300 basis points compared to a 480 basis points contraction in Q4 of 2020.
Our adjusted EBIT margin contraction in Q1, 2022 was 300 basis points compared to a 480 basis points contraction in Q4 of 2021, we are confident that the materials input inflation that has put short term pressure on the business as transitional and importantly that.
Speaker 4: We are confident that the materials input inflation that is put short term pressure on the business is transitional and importantly, that our efforts will help to offset these headwinds. With that, let me turn the call back.
Our efforts will help to offset these headwinds.
With that let me turn the call back over to Andrew.
Thank you John .
Speaker 3: In summary, cure the key takeaways on slide 22.
In summary here are the key takeaways on slide 22.
First on the market the landscape maintenance market has a resilient nature and bright view is growing at rates significantly above the industry.
Speaker 3: First on the market, the landscape maintenance market has a resilient nature and bright view is growing at rates significantly above the end.
Speaker 3: The landscape development market is showing architectural and bidding activity at levels which will support significant growth for Brightview as the industry leader. We are optimistic about trends we see across our segments.
The landscape development market issuance architectural and bidding activity at levels, which will support significant growth for bright view as the industry leader, we are optimistic about trends, we see across our segments.
Second growth.
Our seven 3% land organic growth in Q1 is our third consecutive quarter of organic expansion and believe we will sustain above industry average growth rates for the foreseeable future investment in our sales force combined with increasing use of Omnichannel and digital marketing continues to deliver year over.
Speaker 3: Our 7.3% land organic growth in Q1 is our third consecutive quarter of organic expansion and believe we will sustain above industry average growth rates for the foreseeable future. The investment in our sales force combined with increasing use of omnichannel and digital marketing continues to deliver year-over-year improvements.
Year improvements.
Speaker 3: An opportunity pipeline has expanded hundreds of millions of dollars in the last
And our opportunity pipeline has expanded hundreds of millions of dollars in the last year.
The intense customer focus culture within the company is also driving up our retention rates and combined with our sales performance is creating a reliable source of sustainable growth.
Speaker 3: The intense customer focused culture within the company is also driving up our attention rates. And combined with our sales performance is creating a reliable source of sustainable growth.
Third technology, we continue to deploy best in class customer engagement and operational management solutions.
Speaker 3: Third, technology. We continue to deploy best in class customer engagement and operational management solutions.
Speaker 3: Our technology is successfully enhancing productivity, profitability, and client engagement. We recently kicked off an ex-generation investment in Brightview Connect 2.0, which will deliver highly requested enhancements for our customers in 2022, and will continue to differentiate Brightview's digital capability.
Our technology is successfully enhancing productivity profitability and client engagement. We recently kicked off a next generation investment and break new connect to point out which will deliver highly requested enhancements for our customers in 2022, and we will continue to do differentiate bright news digital capabilities.
Fourth sales and marketing in addition to technological enhancements, we continue to grow and invest in our sales organization and expand the use and effectiveness of our sales tools. The result is increased efficiencies, while positioning us to continue to deliver profitable growth.
Speaker 3: Forth, sales and marketing. In addition to technological enhancements, we continue to grow and invest in our sales organization and expand the use and effectiveness of our sales tools. The result is increased efficiencies while positioning us to continue to deliver profitable growth.
The improved productivity should lessen the need to expand the sales force at the same rates as the last several years, our sales and marketing strategies and structure, our formula for long term success.
Speaker 3: The improved productivity should, lessen the need to expand the sales force at the same rates as the last several years. Our sales and marketing strategies and structure are a formula for long-term success.
Fifth in M&A.
Speaker 3: Fifth in M&A, the results of our acquisition strategy continue to benefit our revenue growth and with an attractive $600 million plus pipeline.
The results of our acquisition strategy continued to benefit our revenue growth and with an attractive $600 million plus pipeline.
Speaker 3: Acquisitions will continue to be reliable and sustainable source of growth.
Acquisitions will continue to be reliable and sustainable source of growth.
Speaker 3: We have added strategic locations and service line enhancements throughout the United States, and believe the deals we are currently negotiating will expand our presence and our depth of landscaping services across the country.
We have added strategic locations and service line enhancements throughout the United States and believe the deals. We are currently negotiating will expand our presence and our depth of landscaping services across the country.
Speaker 3: And sixth cash, we continue to generate significant cash and we'll focus on utilizing our strong balance sheet, driving profitable growth through M&A, share repurchases, and potentially looking at other ways to return capital to stakeholders. Our remain is optim-
And cash we continue to generate significant cash and will focus on utilizing our strong balance sheet driving profitable growth through M&A share repurchases and potentially looking at other ways to return capital to stakeholders.
I remain as optimistic as ever about our prospects I. Thank our teams for their dedicated response to the winter storms and their continued attention to designing creating maintaining and enhancing the best landscapes on Earth.
Speaker 3: I thank our teams for their dedicated response to the winter storms and their continued attention to designing, creating, maintaining, and enhancing the best landscapes on Earth.
Speaker 3: Thank you for your interest and for your attention this morning. We will now open the call for your questions.
Thank you for your interest and for your attention. This morning, we will now open the call for your questions.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two.
Speaker 1: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If there are any reason you would like to remove that question, please press star followed by two.
Casey we do have our first question and it comes from George Tong of Goldman Sachs. George. Please go ahead.
Speaker 1: OK, so we do have our first question, and it comes from George Tong of Goldman Sachs. George, please go ahead.
Speaker 3: Hi, thanks for the morning. Can you provide updated details and how contracted landscape maintenance revenues now compare versus pre-COVID levels and how ancillary maintenance revenues have been impacted by Omicron?
Hi, Thanks. Good morning can you provide updated details and how contracted landscape maintenance revenues now compare versus pre COVID-19 levels and how ancillary maintenance revenues have been impacted by omicron.
Sure.
Speaker 3: Sure, and the morning George. Right now, where were the pace we're running at George, we are actually operating above pre-COVID levels.
Morning, George.
Right now, we're with the pace and we're running at George we were actually operating above pre COVID-19 levels.
Speaker 3: So we're happy to say that, you know, we are back that the organic growth friends have improved to the point now where we're growing to places we've not been before. We're pretty excited actually about where that's that. And that's the question.
So we're happy to say that we are back that the organic growth trends have improved to.
To the point now where we're growing.
Two places we've not been before.
Pretty excited actually about where that's at and Thats across certainly in our contract business.
Speaker 3: Certainly in our contract business, in our Ancillary business, actually if you look at the first quarter, it's actually performing at a very strong pace as well. So that gap between 2019 and 2022, we filled it and we're back in the set.
Ancillary business actually if you look at the first quarter, it's actually performing at a very strong pace as well so.
That gap between 2019 and 2022, we filled it.
We're back we're back in the south.
Great.
Speaker 3: Right? You talked about shortening the expiration date for bid prices in the development business to better adapt to rising input costs. Can you highlight your strategies to respond to rising input costs in your maintenance business, particularly around labor and how pricing changes will mitigate the headwinds?
You talked about shortening the expiration date for bid prices in the development business to better adapt to rising input costs can you highlight your strategies to respond to rising input costs in your maintenance business, particularly around labor and how pricing changes will mitigate the headwinds.
Speaker 3: Absolutely. In our maintenance business, if you talk about I'll take it with both material and labor. Material costs tend to be more in our our taps
Absolutely.
Our maintenance business, if you talk about I'll take it with both material and labor material costs tend to be more in our ancillary portion of our maintenance business and thus our bid in a much shorter in a.
Speaker 3: And thus our bid in a much shorter window, usually within four to six weeks of installation, we're putting the bids together. So they're very current cost and they reflect the current acquisition of those materials in those bids. So we believe we are actually facing or really addressing the inflationary positions on material within maintenance. So don't have any of the negative impacts that you see in warm-term fixed contracts that we see.
A much shorter window, usually within four to six weeks of installation, we're putting the bids together so theyre very current cost and they reflect the current bill.
Current acquisition to those materials in those bids. So we believe we are actually facing or really addressing the inflationary positions on material within maintenance and so don't have any of the negative impacts that you see in long term fixed contracts that we see as more of our development business.
Speaker 4: Yeah, and George, this is John . I think one other thing, and you've heard it in our comments, we're doing a really good job in managing the labor. We feel in both segments.
And George This is John I think one other thing.
<unk> heard it in our comments, we're doing a really good job in managing the labor.
We feel.
In both segments.
Speaker 4: The other thing that we're focused heavily on is doing more in-house labor versus subcontractor, which tends to be more efficient for us and has a less drag on the P&L. So we made progress on both those fronts within the development segment and the maintenance segment within the quarter, and we're gonna obviously continue to try to do that going forward to offset some of the escalations that we're doing.
Great.
Other thing that we're focused heavily on is doing more in house.
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Labor versus subcontractor, which tends to be more efficient for us and.
And as a less drag on the P&L. So we made progress on both those fronts within the development segment in the maintenance segment within the quarter and we're going to obviously continue to try to do that going forward to offset some of the escalations that we've see addressing your last issue on pricing George we're going on a very deliberate and focused.
Speaker 3: addressing your last issue on pricing George, we're going on a very deliberate focused approach to engaging with
<unk> to engaging with all of our customers showing that the cost inflation that we've seen in labor and materials are things that we need to address and really work together with the customers on being able to cover those inflationary costs that effort right now is.
Speaker 3: showing that the cost inflation that we've seen in labor and materials are things that we need to address and really work together with the customers being able to cover those inflationary costs. That effort right now is right in the spec of it. And most of those are dealing with contracts as they renew, most of which renew kind of in the March April May timeframe as new landscapes come into play. So we expect to see that offset some of those inflationary aspects in the second half of our year.
Right and I think of it.
And most of those are dealing with contracts as they renew most of which renew kind of in the March April may timeframe as new landscapes come into play. So we expect to see that offset some of those inflationary aspects in the second half of our year.
Got it thank you very much.
Thank you George.
Speaker 1: Thank you George. Our next question comes from Schlomo Rosenbaum from Stuyfl. Schlomo, please go ahead.
Next question comes from Shlomo Rosenbaum from Stifel. Please.
Please go ahead.
Hi, Thank you very much and good morning.
Speaker 5: Hi, thank you very much and good morning. Andrew, maybe you could comment a little bit about how does the Ancillary Services is a percentage of total in maintenance? How does that compare to what we saw in a pre-COVID level? Are we back to the kind of two thirds, one third in terms of contract versus me? Ancillary, are we still kind of trailing that? And yeah, I'm looking at it more like on a customer-by-customer basis as opposed to just the whole company, just to gauge where we are.
Andrew maybe you could comment a little bit about how does the ancillary services as a percentage of total land maintenance, how does that compare to what we saw in a pre COVID-19 level are we back to the kind of two thirds, one third in terms of contracts versus ancillary or we still kind of trailing debt and.
Yes, I'm looking at it more like on a customer by customer basis as opposed to just the whole company just to gauge where we are.
Okay.
Yes, I think.
Speaker 3: Yeah, I think in general, the shape of the business has returned to kind of pre-COVID levels. That would be pretty much across all segments.
In general the shape of the business has returned to kind of pre COVID-19 levels, but that would be pretty much across all segments. We used to we clearly saw an impact in the hospitality and retail verticals during the height of the Covid pandemic. The reality is I think you can see it is as those those segments, especially in the resort era.
Speaker 3: We used to clearly saw an impact in the hospitality of retail verticals during the heights of the COVID pandemic. The reality is, I think you can see it, is that those segments, especially in the resort areas, have seen quite a rebound. And we've been able to go back and go and work with those customers on identifying areas and their properties, which continue to differentiate.
<unk> have seen quite a rebound.
We've been able to go back and go and and work with those customers on identifying areas in their properties, which continue to differentiate them.
Speaker 3: So that kind of mix, you said, 2-3 contract, 1-3-inch lyric. That's pretty much where we're operating at, and we feel we're back in kind of a normalized pace. We would expect that to continue as we move throughout the year, and that we're back in a normalized operating.
That kind of mix you said two thirds contract one third ancillary that's pretty much where we're operating at and we feel we're back into kind of a normalized pace. We would expect that to continue as we move throughout the year.
We're back to the normalized operating cadence.
Great and then how much longer based on your.
Speaker 5: Great. And then how much longer based on your
What you see in the future with the contracts that you had bid on the pre inflationary thesis how long is it going to take for you to cycle through those contracts in other words.
Speaker 5: what you see in the future with the contracts that you had bid on the preinflationary basis. How long is it going to take for you to cycle through those contracts? In other words, you have to fulfill the contracts where you made a commitment in terms of the pricing before the inflationary environment really started to take off. How long will it take you to really get those implemented so that we won't have that weighing on the...
You have to fulfill the contracts, where you've made a commitment in terms of the pricing before the inflationary environment really started to take off how long will take you to really get those implemented so that we won't have that weighing on the numbers.
Speaker 3: Yeah, we've been doing a deep dive on that, actually going in and working with all of our branches.
Yes, we've been doing a deep dive on that actually going in and working with all of our branches.
Speaker 3: We would expect, you know, we saw an improvement for four or n80 bits to three-hundred-bip contraction in this quarter. We would expect that to continue to improve slightly over the course of the next several quarters. And we'd expect really it's gonna be late in the second half, probably into the first quarter of 2023, before we speak, really fully getting out of that. But we do expect the impact to lessen over time.
We would expect we saw an improvement from 480 bps to 300 bip contraction in this quarter we were.
We'd expect that to continue.
To improve slightly over the course of the next several quarters and we would expect really it's going to be late in the second half.
Into the first quarter of 2023 before we seek really fully getting out of that but we do expect the impact to lessen over time.
Okay.
And then in terms of the development projects, what's going on with the construction or are we seeing.
Speaker 5: And then in terms of development projects, what's going on with the construction? Are we seeing, is it really delayed? Are you seeing more delays now? Are you seeing any areas worth accelerating? How should we think about that in terms of the time table or your visibility to when you'll actually be able to get into the projects since you guys are usually the last ones, kind of the capstone on the project?
Is it really delayed or are you seeing more delays now are you seeing any areas, where it's accelerating.
How should we think about that in terms of like kind of the timetable or your visibility to when you'll actually be able to get into the projects. Since you guys are usually the last one's kind of a capstone on the project.
Yes, I think the delays that we're seeing now in the development sector segment are actually less COVID-19 related and they are more just labor availability of our of the other subs before us.
Speaker 3: Yeah, I think the delays that we're seeing now in the development sector, Segwit, are actually less COVID-related and they're more just labor availability of our other sub before us.
Speaker 3: So that's the uncertainty. Sometimes when some contractors before us actually get in and get done on time, there are places in the country where they're doing very well. And some of the construction companies and the general contractors do a fabulous job of getting those done. It's just somewhat, when you take the broad brush, the broad scale that we do landscaping across the country, there are pockets where maybe they're not quite as on top of it.
So thats the uncertainty sometimes when the subcontractors before us actually get in and get done on time, there are places in the country, where theyre doing very well and some of them.
Construction companies in the general contractors do a fabulous job.
Getting those done its just summit when you take the broad brush the broad scale that we do landscaping across the country. There are pockets, where maybe they are not quite as on top of it as as we are we're ready and prime to go. That's the fortunate thing is is the second.
Speaker 3: as we are. We're ready in prime to go. That's the fortunate thing is, is the second, the projects and the substance before us get done, we're ready to go. We are seeing a lessening of that impact relative to where it was, let's say, six months ago. And so we are optimistic about being able to post 5% plus organic growth in our development segment as we look forward.
The projects in the subs before us get done we're ready to go we are seeing a lessening of that impact relative to where it was let's say six months ago and so we are optimistic about being able to post 5% plus organic growth in the in our development segment as we look forward.
Thank you.
Our next question comes from Tim Mulrooney from William Blair, Tim. Please go ahead.
Speaker 1: Our next question comes from Tim Mulroney from William Blair. Tim, please go ahead.
Good morning, Andrew John .
Speaker 6: Good morning Andrew, John . A couple questions. Apologize if this one's been asked already, but 7% organic growth in your maintenance cream business in the first quarter. Can you walk us through how organic growth in the business trended through the quarter and any more recent color you could provide on January ? Sure.
Couple of questions I apologize if this one has been asked already but.
7% organic growth in your maintenance Green business in the first quarter.
Can you walk us through how organic growth in the business trended through the quarter and.
Any more recent color you could provide on January .
Sure absolutely firm and good morning.
Speaker 3: You know, if you look at it in three months, October is our business.
And if you look at it.
He has a three months October is our busiest month and thats just due to the nature of that.
Speaker 3: And that just due to the nature that we were still kind of in fall mode.
We were still kind of in the fall fall mode, and so just naturally what you would see it throughout the quarter as clearly our seasonal market kind of slows down and our evergreen markets continue moving right forward. So what I would say is is that in general.
Speaker 3: And so just naturally what you'd see throughout the quarter is clearly our seasonal market kind of slows down and our evergreen markets continue moving right forward. So what I would say is that in general we're seeing a...
We're seeing a.
Positive pace against seven 3%.
Speaker 3: Positive pace, again, 7.3%. Growth over the whole...
Growth over the whole business.
And we did see I would say, though in November and December while the magnitude. The dollar magnitude is the biggest of October we're actually seeing an improving profile over in November .
December which that's why is that gives us optimism as we go into gain.
Speaker 3: which that's why that gives us optimism as we go into January Preview March to actually pass Gating Bull.
January February March actually cascading bolt.
Speaker 3: So as I said, you know, overall dollars wise, October is the biggest, but an improving trend as we go through November and December when it comes to the growth.
<unk> as I said overall dollars wise October is the biggest but an improving trend as we go through November and December when it comes to the growth picture.
Speaker 6: Yeah, that makes a lot of sense in you because I remember correctly your guide was like three to four percent and you come out with seven So it makes sense that things improved Throughout the quarter relative to your expectations and now I guess your guide is four percent plus
Yes that makes a lot of sense, Andy because I think if I remember correctly. Your guide was like 3% to 4% you come out with seven.
So it makes sense that they have improved throughout the quarter relative to your expectations and now I guess your guide is 4% plus but theres a plus there okay and.
Speaker 3: but there's a plus there. Okay. And... Yeah, I just... Yeah, and then the reason the... These are the pluses, you know, it's just in these seasonal markets, you just don't know exactly whether the snow, whether it comes in or not. And if it's a little lighter snow in March, it allows us to really accelerate some of that growth into the March...
Yes, yes.
The reason the.
The pluses.
Just in the seasonal markets you just don't know exactly whether the snow weather, whether it comes in or not and if it's a little lighter snow in March it allows us to really accelerate some of that growth into the March period.
Okay. Okay. That's helpful.
Speaker 6: Okay, okay, that's helpful. And then one more for me, Andrew, it looks like your deal pipeline has grown in the slides. I think it's at 600 million today, up from 400 million. Yes. I don't know, a year or two ago, is this kind of because you've expanded your internal M&A capabilities? Or is there something broader going on here in the marketplace where there are more folks?
And then one more for me and you it looks like your deal pipeline has grown in the slides I think it's at $600 million today up from $400 million yes.
I don't know a year or two ago is this kind of because you've expanded your internal M&A capabilities or is there something broader going on here in the marketplace, where there are more folks coming to the table and being willing to have the conversation about selling versus a couple years ago.
Speaker 6: coming to the table and being willing to have the conversation about selling versus a couple years.
It really comes down to our match rate maturing in our in our approach to M&A.
Speaker 3: It really comes down to our maturate and we're maturing in our approach to M&A.
Speaker 3: and we're adding people. So the thing is we've been hand over the last couple years, we've enhanced and built out our dedicated team. We've actually added another business developer, what I call the M&A business developer going out, searching for deals. I think now also we've established the reputation and that's I think the biggest thing we have, probably the
And we're adding people. So the thing is we've enhanced over the last couple of years, we've enhanced and built out our dedicated team. We've actually added another business developer what I call. The M&A business developer going out searching for deals I think now also we've established a reputation and Thats I think the biggest thing we have probably the best.
Speaker 3: stimulates the M&A market. Is it we have a reputation for being extremely fair, extremely straightforward, and the purchaser of
Emulates the M&A market is that we have a reputation for being extremely fair extremely straightforward and the purchaser of choice really is.
Speaker 4: really it's it's the people have heard we've done almost thirty acquisitions over the course of last five years and that success breads a reputation where people prefers come to bright view as others yet and and and and ten to morning this is shown the other thing i would add to and his comments exactly what he said we're getting more people reach out to us direct
The people have heard we've done almost 30 acquisitions over the course of the last five years and that success breeds, a reputation where people preferred come to bright view as others, yes.
Tim Good morning. This is John the other thing I would add to Andrew's comments is exactly what he said, we're getting more people reach out to us directly.
Speaker 4: Whether it's to our M&A team directly to myself, directly to Andrew. And I think it's a causal of everything that Andrew talked about, but what we've been able to demonstrate over the last three or four years.
Whether it's to our M&A team directly to myself directly to Andrew.
And I think it's a causal of everything that Andrew talked about what we've been able to demonstrate over the last three or four years.
Yes. So you think it's more internal to bright you then.
Speaker 6: Yeah, so you think it's more internal to Brightview than that's specific to Brightview than any real change in the market. Can you touch on how valuations have trended relative to the historical average?
Specific to bright view than any real change in the market can you touch on how valuations have trended relative to the historical average.
Yes, we're staying right within that window of five to seven times, we screen very disciplined.
Speaker 4: Yeah, we're staying right within that window of five to seven times. We're staying very disciplined, very matter of fact.
Very matter of fact.
Speaker 4: Every now and then for a deal that may be a little bigger we may go a little higher But again, that's on a pre synergistic basis. So these are still going to be very accretive for us
Every now and then for a deal that may be a little bigger we may go a little higher but again, that's on a pre synergistic basis. So these are still going to be very accretive for us but for the most part.
Speaker 3: but we're for the most part, Tim, we have not waved out of that far at the seven times. As people come into the marketplace, obviously expectations sometimes of sellers go up and frankly we stay very disciplined. The amount of opportunities out there are so big that we don't have to go out and pay up.
Tim we have not wavered out of that five to seven times.
As people come into the marketplace, obviously expectations, sometimes of sellers go up and frankly, we stayed very disciplined in the amount of opportunities out there are so big that we don't have to go out and pay up.
Speaker 3: that some of our other competitors might go and pay up for. Because we have the companies approaching as Johnson, they're approaching us and we have a reputation. Those companies, those other companies out there that compete with us in the M&A marketplace may not have the reputation, may not have the balance sheet, may not have the ability to create career opportunities and the track record of what we have in the business. So frankly, they have to pay up to be able to attract them to go with another buyer rather than ourselves.
Of our other competitors might go and pay up for because we have the company's approaching as John said they are approaching us and we have a reputation those companies are those other companies out there that compete with us in the M&A marketplace may not have the reputation may not have the balance sheet may not have the ability to create career opportunities and the track record of what we have.
And the business, so frankly, they have to pay us to be able to attract them.
So with another buyer rather than ourselves.
Thank you Tim.
Speaker 1: Thank you Tim. Our next question comes from Justin Hawke of Robert W. Baird. Robert, please go ahead. Justin, please go ahead, sorry.
Our next question comes from Justin Hauke of Robert W. Baird.
Please go ahead Justin Please go ahead sorry.
Speaker 7: Okay, so thank you for all the colors so far. The question I had just looking at the items for Q2, if I use the math 4% for organic land and 5% for development, organic, I keep snow flat, I get just over 670 million of revenue versus the 620 to 680.
Two first names.
Okay.
Thank you for all the color so far though the question I had just looking at the guidance for <unk>.
If I use the math, 4%.
Organic land and 5% for development organic keep snow flat I get just over $670 million of revenue versus the $6 20 to $6 80 guide so.
Speaker 7: So given that M&A was, you know, pretty material here in the first quarter, I was hoping you could give us...
Given that M&A was.
The material here in the first quarter I was I was hoping you could give us.
Speaker 7: some commentary on what the inorganic revenue contribution you're expecting for 2Q and then maybe also based on acquisitions you closed last year or the one you did earlier this year, how much total revenue contribution are you assuming from M&A for 2020?
Some commentary on what the inorganic revenue contribution you're expecting for QQ and then maybe also based on acquisitions you closed last year or the one you did.
Earlier this year, how much total revenue contribution are you assuming from M&A for 2022.
Yeah, one thing as you look at the guide that we have out there is recognizing last year. The snow is slightly above average in total for the quarter. So on a year over year basis.
Speaker 3: Yeah, one thing as you look at the guide that we have out there is recognizing last year, the snow is slightly above average and total for the quarter. So on a year over year basis, I would definitely would take that down a portion, whether that's so.
I would take that would.
Definitely would take that down a portion whether that's.
10% to 15%.
Speaker 3: or show just because he has his ordinary federal. When you look at the midpoint.
Or so just because we had as well.
Award in early February .
When you look at the midpoint of our guidance. So we do have staked slow down somewhat because of the over delivery on so when it comes to our assumptions improved related to acquisitions.
Speaker 3: So we do have to take snow down so much because of that kind of over-delivery on snow. When it comes to our assumptions, I think we really related to that position. I think what you guys think about is, you know, number one is primarily weighted more towards our development segment as we have some significant kind of.
I think what you guys think about as a number one is primarily weighted more towards our development segment is that we had some significant.
Speaker 3: kind of deals which have rolled into development. So I think it's going to be kind of a balance between the two. But I think overall, when you look at that, you know, it's going to be somewhere around $15 million or so when it comes to development.
Kind of deals which are rolled into into development. So I think it's going to be kind of a balance between the two.
But I think overall when you look at that.
It's going to be somewhere around $15 million or so when it comes to development.
Roughly.
Speaker 3: And then on the maintenance side, the probably a shun all men.
And then on the maintenance side, there's probably a small amount.
Speaker 3: So, so right around 30 million dollars. So again, much of that depends on their working still act, their recent elements still in there, and also depends on the ability of the world to fit that in. But you know, somewhere between let's say 25 and 30 million.
So so right around $30 million, but again much of that depends there were some <unk> elements stellar there. It also depends on mobility of welcome kits out there, but you know somewhere between let's say $25 million to $30 million in total.
Okay, Yes.
Speaker 7: Okay, yeah, that's helpful. And I appreciate that on the February head win. I mean, yeah, it's going right now, so hopefully that helps. On my second question. Foo!
That's helpful.
And I appreciate that on the February headwind.
Yeah, It's snowing right now so hopefully that helps.
On my second half.
Speaker 7: Yeah. You talked a lot about the inflationary costs on the development side and particularly on materials. Labor, I mean, just given that you're going into, or you will be in the next couple of months, your seasonal hiring time, I think last quarter you were saying that the rate of labor inflation was running in kind of the 7% range in the second half of 2021. I'm just curious if you're seeing kind of a similar level of...
Yes.
You talked a lot about the inflationary cost on the development side and particularly on materials.
Labor I mean, just given that youre going into or you will be in the next couple of months your seasonal hiring time I think last quarter, you were saying there.
And the rate of labor inflation was running in kind of the 7% range.
In the.
Second half of 'twenty one.
Just curious if youre seeing kind of a similar level.
Speaker 7: you know, wage increases this year, or is that increased or decelerated? Anything you can give on that side, I think, would be helpful.
Wage increases this year or is that increased or decelerated. Even you can give on that side I think would be helpful.
Yes, Justin I think again it depends on certain parts of the country, but if we go back and look at what we experienced this time, we were slightly over 4%.
Speaker 4: Yeah, Justin, I think again, it depends on certain parts of the country. But if we go back and look at what we experienced this time, we were slightly over 4%.
We've had some quarters between now and then where it's been certainly.
Speaker 4: You know, we've had some quarters between now and then where it's been certainly above that. We've been assuming that we're going to see, you know, at least 5%.
Above that.
We've been assuming that we're going to see at least 5%.
Speaker 4: Could we have a quarter where it's higher than that because of timing? Sure.
Could we have a quarter, where it's higher than that because of the timing sure, but I think thats kind of how Andrew and I are thinking about it a little bit higher than what we've experienced over the last three or four years. When it was about 4% so 5% plus.
Speaker 4: But I think that's kind of, you know, how Andrew and I are thinking about it, a little bit higher than what we've experienced over the last three or four years when it was about 4%. So 5% plus.
Speaker 3: uh... is is what we're thinking about and that's and that's what we're looking at it we're talking with customers on price increases to make sure the price for increases we're getting adequately covers those kind of inflationary aspects that are out there and fortunately so far the negotiations are gone and we're just again in the middle of them we're really optimistic about where our customers are cooperating with us to make sure that the the the cost inflation that we see are being covered but with uh... with price
Is what we're thinking about it.
And that's what we're looking at is we're talking with customers on price increases to make sure that the price increases we're getting adequately covers those kind of inflationary aspects that are out there and fortunately so far the negotiations we've gone and we'll just again in the middle of them, we're really optimistic about what our customers are cooperating with us to make sure that the cost.
That we see are being covered but with fluke price.
Thank you Justin for that question next question comes from Hamzah Misery of Jefferies. Hamzah. Please go ahead.
Speaker 1: Thank you Justin for that question. Next question comes from Hans and Missouri of Jeffries. Hansler, please go ahead.
Hi, This is Hans Hoffman filling in for Hamzah <unk> Macquarie.
Speaker 8: Hi, this is Hans Hoffman filling in for Hamsa Mazzari. So my first question is, could you just talk a little bit about, you know, your technology journey and I guess, you know, what's behind you, what's yet to come, and if you're starting to see some of the benefits from tech spend in the margin line or on the upper end?
My first question is could you just talk a little bit about.
Youre technology journey, and I guess, what's behind you, what's yet to come and if youre starting to see some of the benefits from tech spend and the margin line or on the operating leverage.
Okay.
Speaker 3: Yeah, look, we have absolutely invested significant dollars in new platforms and new operating technology.
Yes look what we we are absolutely investing significant dollars.
And new platforms, and new operating technologies that we see across the board, whether that's internal or that's customer facing and no question that actually over the last several years as many of our internal.
Speaker 3: that we see across the board whether that's internal or that's customer facing. And no question that actually in the last several years has many of our internal investments when it comes to efficiencies around going to one operating system.
Our internal investments when it comes to efficiencies around going to one operating system. When it goes into our ability to capture time, whether electronic time capture those kinds of things I think fueled some of the margin expansion. We saw several years ago. So we're actually very pleased right now with those investments actually.
Speaker 3: when it goes into our ability to capture time with our electronic time capture. Those kinds of things, I think, fueled some of the margin expansion we saw several years ago.
Speaker 3: So we're actually very pleased right now with those investments actually did generate nice returns.
<unk> did generate nice returns I think that as we look forward and where we see things going forward as the new BV connect two point, though which is really a customer portal, which is be a unique experience customers will be able to have with bright view being able to engage with us across their entire customer.
Speaker 3: I think that as we look forward and where we see things going forward is the new
Speaker 3: BB Connect 2.0, which is really a customer portal, which would be a unique experience customers will be able to have with BrightView.
Speaker 3: being able to engage with us across their entire customer relationship whether it's
Chip whether it's.
Speaker 3: whether it's ancillary services, whether it's service verification.
Whether it's ancillary services, whether it's service verification, whether its history of bids whether it's your financial relationships or frankly, whether it's the relationships and who is servicing your account contact points and pictures and videos on things that we do throughout the entire property, we manage that's all going to the web and going to be.
Speaker 3: whether it's history of bids, whether it's your financial relationships, or frankly, whether it's relationships and who is servicing your account, contact point.
Speaker 3: and pictures and videos on things that we do throughout the entire property we manage. That's all going to the web and going to be digitally managed with our customer. We're really excited about launching this and that'll be probably in our Q3, kind of Q4 time frame, really taking BV and HOA Connect to the next level.
Digitally manage with our customer we're really excited about launching listen that'll be probably in the in our Q3 Q4 timeframe really taking BV and HOA connect to the next level.
That's coming we also just recently introduced our Q assay, which is our quality site assessment to point OS software that was launched in the winter or I should say last quarter in Q1, which allows our account.
Speaker 4: We also just recently introduced our QSA, which is our quality site assessment 2.0 software. That was launched in the winter, or I should say last quarter in Q1.
Speaker 3: which allows our account managers to regularly communicate and again, in a digital way, property health and what's going on in the property, the dynamics of the horticultural intensity, of the issues that we're seeing or potentially opportunities for enhancing the entire property. That digital and seamless coordination was launched in Q2 and where we expect that, or Q1.
<unk> to regularly communicate and again in a digital way property health and what's going on in the <unk>.
Property the dynamics of the horticultural intensity of the issues that we're seeing or potentially up opportunities for enhancing the entire property that digital and seamless coordination was launched in Q2, and where we expect that our Q1.
Speaker 3: We would expect that as we mature the usage of it to continue to see it manifest.
We'd expect that as we mature the usage of it to continue to see it manifest and.
Speaker 3: in ancillary business as we look at ways which we can truly enhance property.
Ancillary business as we look at ways, which we can truly enhanced properties. So that's more on a revenue growth standpoint to basically support the overall business and our customer engagement. We are really excited about where technology can take the business because those are things when it comes to again, our one operating system one.
Speaker 3: So that's more on our revenue growth side standpoint to basically support the overall business and our customer engagement.
Speaker 3: really excited about where technology can take the business because those are things when we were comes to again i want operating system one system for a whole company
System throughout the whole company and electronic time capture which is a little bit more internally focused these two other platforms of <unk> 2.0, an H at BV connect externally focused and those are other things when it comes to technologies, such as autonomous mowing and some things that we see coming into the future over the next several years, which will continue to have that will.
Speaker 3: and electronic time capture, which is a little bit more internally focused. These two other platforms of QSA 2.0 and BB Connect, externally focused. And there's other things when it comes to technology, such as autonomous mowing, and some things that we see coming into the future over the next several years, which will continue to have, that will have some margin impacts. Not quite ready for prime time, but we believe that's gonna have some significant margin impacts as we can take labor out of the business and put autonomous mowing into the business, but that's probably more so in the 2020.
Have some margin impacts not quite ready for prime time, but we believe that's going to have some some significant margin impact as we can take labor out of the business and put autonomous mowing.
The business, but thats, probably more so in the 2000 2024 25 timeframe.
Speaker 9: hundred seven thirty
Got it that's helpful. And then could you just maybe talk about what margins on ancillary it looks like again I guess, the first maintenance and how big ancillary is today versus pre pandemic levels than maybe historical peaks if any.
Speaker 8: Got it. That's helpful. Um, and then could you just maybe talk about what margins on antler? It looked like again, I guess versus maintenance and how big antler is today versus pre pandemic levels and maybe historical peaks, if any.
Speaker 4: Yeah, this is John . I'll take that. I mean, I think our our mix
Hi, This is John I'll take that I mean, I think our our mix.
Speaker 4: As we said, it's been about, you know, one-third, two-thirds ancillary versus...
As we've said has been about one third two thirds ancillary versus.
Contract that's been pretty consistent certainly was in Q1 when you go back and look at it what it was in Q1 and 19 in 'twenty versus Q1 of 2022.
Speaker 4: contract that's been pretty consistent. Certainly was in Q1 when you go back and look at it, what it was in Q1 in 19 and 20 versus Q1 in 2022. From a margin standpoint, we don't disclose specifically the antlery margins, but I will tell you on that.
From a margin standpoint, we don't disclose specifically the ancillary margins, but I will tell you on that.
Speaker 4: They tend to be slightly better than our contract margins. We've been able to maintain that discipline. And the other thing that we focus on that we're, is our penetration rate. We don't disclose that as well, but the penetration rate, meaning the percentage of ancillary dollars to contract dollars, has been very, has been getting better. And that, that's, that, we're starting to see that come back, which was, were in Andrew's prepared comments.
They tend to be slightly better than our contract margins, we've been able to maintain that discipline and the other thing that we focus on that.
As our penetration rate, we don't disclose that as well, but the penetration rate, meaning the percentage of ancillary dollars the contract dollars.
<unk> has been very.
He has been getting better and thats.
We're starting to see that come back, which we're in Andrew's prepared comments and we expect that to continue.
Speaker 4: And we expect that to continue throughout the year and get, quite frankly, to more historical levels in Q3 and Q4, which are the real good quarters for us when we get past the seasonal snow piece.
Continue throughout the year and quite frankly to more historical levels in Q3, and Q4, which.
The real good quarters for us.
When we get past the seasonal snow piece.
All right.
Thank you for your question next.
Speaker 1: Next question, we have Andrew Steineman from JP Morgan. Andrew, please go ahead.
Next question, we have Andrew Steinman from J P. Morgan Andrew. Please go ahead.
Speaker 10: Hi, Andrea, I wanted to go back to your comments about price increases and the ability to cover wage inflation the second half of the year in your maintenance business. My question is, do you feel like spending with a typical maintenance customer will go up about five percent, or do you feel like with the contract price going up, they might get more selective about their ancillary services? Thank you. Thank you. Thank you.
Hi, Andrew I wanted to go back to your comments about price price increases in the ability to cover wage inflation in the second half of the year in your maintenance business.
My question is do you feel like spending with a typical maintenance customer will go up about 5% or do you feel like with the contract price coming up they might get more selective about their ancillary services.
Yeah, that's a really good question.
And you look at the balance I think there is an acknowledgment right now which has been different over from last several years. It just overall inflationary pressures are hitting the business and an acknowledgment that the property also needs to be maintained at a certain level, we have not seen a downtick in ancillary services.
Speaker 3: You look at the balance. I think there's an acknowledgement right now, which has been different over from the last several years that just overall inflationary pressures are hitting the business. And an acknowledgement that the property also needs to be maintained at a certain level. We have not seen a down tick in ancillary services because of the pricing increases that we see going out there. So I can't...
Because of the pricing increases that we see going out there.
So I can't.
Speaker 3: You know, there are portions of our ancillary business such as, you know, irrigation management, tree service management.
There are portions of our ancillary business such as.
Irrigation management.
Free service management.
Speaker 3: you know, fertilization, those tend to be ancillary lines. So those, well they are certainly in our ancillary portion, they're really less, there's some of less discretion.
Fertilization those tend to be ancillary lines. So those while they are certainly in our ancillary portion there really less.
It's discretionary.
And so I really I think the magnitude of the increase that we're seeing again with an overall inflationary environment in the country right now we're not seeing an indication of.
Speaker 3: And so I really, and I think the magnitude of the increase that we're seeing, again, with an overall inflationary environment in the country right now, we're not seeing an indication of Ancillary reduction in our pipeline and eventually projects. So I'm not anticipating a big fit. That next.
Ancillary reduction and our pipeline of ancillary projects. So.
Not anticipating a big trip to.
That makes total sense. Thank you so much.
Thank you Angie our final question comes from Bob <unk> of CJS Securities. Please.
Speaker 1: Thank you Andrew. Our final question comes from Bob Labick of CJS Securities. Bob, please go ahead.
Please go ahead.
Speaker 6: Thank you, good morning. I wanted to follow up on the pricing and just talk a little bit about competition, particularly in the meetings contract pricing and the annual renewals that you'll be going into shortly. Given the fragmented nature of the market, how are competitors reacting to the higher wages and higher costs? Are they seeking to raise prices on their renewals? Are they accepting lower margins, or do you expect them to? And how is this impact your strategy on contract renewals and pricing going forward?
Thank you good morning.
I wanted to follow up on the pricing and just talk a little bit about competition.
And the maintenance contract pricing.
Pricing the annual renewals, so you'll be going into shortly given the fragmented nature of the market how are competitors reacting to the higher wages and higher costs are they seeking to raise prices on their renewals are they accepting lower margins or do you expect them to and how is this going to impact your strategy on contract renewal.
Olson pricing going forward.
Good question Bob.
When we look at the marketplace in any given market. We have four to five solid competitors that are compete at the higher end and in the commercial landscaping market. Those competitors are professional companies they actually become mostly our acquisition candidates that.
Speaker 3: When we look at the marketplace, in any given market, we have four to five solid competitors that compete at the higher end in the commercial landscaping market. Those competitors are professional companies that actually become mostly acquisition candidates.
Speaker 3: that we look at. Those companies are following kind of and looking at normalized levels of price increases that we see in most cases. Of course, you may have particular target customers which our competitors might want to go in and take an opportunity to try and cover it, but the reality is they're facing the same economic pressures we're facing.
We look at those companies are following kind of in looking at normalized levels of price increases that we see in most cases of course, you may have a particular target customers, which our competitors might want to go in and.
And taken opportunity to try and cover it but the reality is they're facing the same economic pressures, we're facing in the labor market and the material market Theres no difference what they're facing so long term strategy they might be able to take our customer.
Speaker 3: in the labor market, in the material market. There's no difference with their facing. So long-term strategy, they might be able to take a customer by taking a price down or not having an increase, but that is in the strategy for long-term success in the competitive market we're in.
By taking a price down or not having an increase but you can't there isn't a strategy for long term success in the competitive market we're in.
Speaker 3: in the competition that we compete with. So we have not seen broad-based, a broad-based impact on that. We've seen, frankly, what we've seen is we've seen our retention levels actually improve as we go forward. Although I will say there have been some bit of a turn that in the marketplace, so I would expect that to be the case, just given the dynamics of where people think about. So overall though,
In the competition that we compete with so we have not seen broad based.
A broad based.
<unk> on that.
<unk> seen frankly, what we've seen is we've seen our retention levels actually improve as we go forward, although I will say, though there have been some bit of a term.
That in the marketplace. So I would expect that to be the case, just given the dynamics of where people think about so overall, though.
Speaker 3: Our overall business remains healthy. What we talked about before, our net new, which is our wins minus our losses, continues to be in a positive trajectory, and we feel supports an organic growth rate of 4% plus as we look going forward for the next several quarters.
Our overall business remains healthy while we've talked about before our net new which is our wins minus our losses continues to be in a positive trajectory and we feel supports an organic growth rate of 4% plus as we look going forward for the next several quarters.
Okay, great. Thanks, so much.
Thank you Bob.
Speaker 1: Thank you, Bob. There are currently no questions registered, so I will hand the conference back over to Andrew Masterman for closing remarks.
Currently no questions registered so I'll hand, the conference back over to Andrew Masterman for closing remarks.
Thank you Billy.
Speaker 3: Thank you, Bailey. Once again, I'd like to thank everyone for participating in our call today and for your interest in BrightView. We look forward to speaking with you when we report our second quarter results and everybody thinks so. Stay safe and be well.
Once again I'd like to thank everyone for participating in our call today and for your interest in bright view.
We look forward to speaking with you when we report our second quarter results and everybody thinks no stay safe and be well.
Okay.
That concludes the <unk> holdings incorporated first quarter fiscal 2022 results Conference call. You may now disconnect your lines.
Speaker 11: That concludes the Brightview Holdings Incorporated First Quarter Fiscal 2022 Results Conference Call. You may now disconnect your lines.
Okay.
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Yeah.
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Okay.