Q1 2024 BrightView Holdings Inc Earnings Call

Okay.

Hello, and welcome to the Bright view Holdings Q1, 2024 earnings call. My name is Elliot I'll be coordinating your call today.

I would like to register a question John stage events. Please press star followed by one on your telephone keypad.

I'd now like to hand over to Chris <unk>, Vice President of finance the floor is yours. Please go ahead.

Good morning, and thank you for joining bright news first quarter fiscal 2024 earnings call.

I'll ask Glenn <unk>, President and Chief Executive Officer, and Bryan Irving Chief Financial Officer, Rob on the call.

Now refer you to slide two of the presentation, which can also be on our Investor relations.

<unk>, which contains our safe harbor disclaimer.

This call May include forward looking statements subject to certain risks and uncertainties.

In addition, during this call we will further and certain non-GAAP financial measures. Please see our 8-K issued yesterday for a reconciliation to these non-GAAP financial measures I will now turn the call over to Dale.

Thank you, Chris and good morning, everyone.

I will start todays call on slide four with some highlights for the first quarter and then provide an update on our strategic initiatives.

Pleased to report that we are off to a solid start and physical 2024, as we achieved meaningful progress on our objectives outlined under one bright view.

On our last earnings call, we set a clear and refresh strategy prioritize our employees align our core businesses, while ensuring our customers come first.

Focus on profitable growth.

And unify the company under one Brian.

During the quarter, we began to successfully execute on this strategy by aligning our sales force to our local operating branches Reintegrating core self perform businesses back into our branches.

Emphasizing noncore portions of our business and continuing to focus on pursuing higher quality profitable business.

While these actions led to a modest impact on our land maintenance revenue for the quarter I am confident we are taking the necessary steps to ensure growth in the medium and long term.

I'm also pleased to report after the sixth quarter in a row, our development business. Once again showed significant growth and margin expansion.

Additionally.

We are proving our commitment to becoming more efficient and removing cost with improvement in our corporate segment.

I am encouraged by the underlying momentum in our business as we execute our renewed strategy and.

And as a result, we are reiterating our financial guidance for the full year.

Additional evidence of our strategy in action with the sale of our U S launch franchise business in January for roughly $52 million.

This was a non core business that did not align with our strategy around self performance and capital allocation.

This move underscores our focus on the core business, but also highlights the value of achieving profitable and reoccurring growth.

We attained a substantial valuation in the private markets.

Well above our current trading multiple.

Providing proceeds that we intend to reinvest in our core business.

The enhancements, we have made in our business to align with our overarching initiatives to operate as a unified bright view.

Throughout the quarter, we made progress implementing our strategy across the entire organization.

We believe successful execution of our one bright these strategy will unlock significant long term shareholder value.

This starts by focus on becoming the employer of choice and we are doing this by reinvesting in our core businesses and our employees.

We are making investments in our fleet and investing in the health.

<unk> and development of our team.

We are also streamlining and optimizing organizational structures at the branch level.

<unk> in our revitalized go to market strategy.

Every new we renewed our focus on improving how we serve our customers with.

With the goal of increasing retention and growing profitably.

Alongside these efforts, we took measures to better align our capital allocation priorities with our branch level needs and our broader initiatives throughout the organization.

On slide five we show one bright view on action and provide a few specific examples of the improvements we have made in the early stages of this value creation journey.

Under this we realigned our sales effort efforts and implemented an incentive plans to ensure the entire organization from the branch to our corporate office is focused on driving profitable growth.

Furthering the collaboration throughout the organization, we put in place a cohesive customer first go to market strategy.

We also enhanced our customer survey, which resulted in improved response rates and it is helping us to gain an even deeper understanding of our customers and their needs.

We're leveraging these findings to further refine and strengthen our go to market approach.

An example of this go to market strategy with the reintegration of our tree and golf services into our core maintenance branches.

This streamlines operations.

It's something that you're looking at as well and then there's the whole just kind of basic thing of Theres. Some customers that you are probably servicing right now that that aren't very profitable. So I guess taken as a whole maybe tail could you talk about one a little bit more of the detail behind why franchise business was noncore.

And how that computes in and what the thought processes on the national account business there too.

Some of that business and that kind of talking national account I'm talking about externally serviced national account business I think you'd call at CES or something like that maybe you can talk about what that means and what kind of look that's getting and then where you are how far along are you on portfolio customer review and exiting those customers, which really don't give you.

You have the return of the profit margin that Youre services should should deserve.

Kind of a one question, but I think they're all kind of see medically relevant together.

I think I've got them all we have in my head so let's try to get through them and you feel first of all why is why is the U S launch non corridor. We are transforming this business and we are trying to develop better ways to support our branches and our sales force out in the field.

Mark.

U S lawns non core franchise business was getting all the benefits that we're providing our branch managers by being part of our franchise network.

Yet they really were not.

Targeted at going after the same customer base, but over time, Unfortunately, as they transition from some of the residential customers to more of the commercial.

We began to see those direct franchisees competing against our local branches using a similar playbook and tool book, leveraging our estimating skills leveraging our purchase.

Purchasing power to run their businesses, that's not what we wanted to do we wanted to make sure that the investments we make to improve this business goes to the benefit of our branch managers in the branches out in the field and the added value was we were able to get a significant multiple above our trading level today to divest this business.

So it was a great choice for us to divest an $11 million of revenue business and get $52 million roughly for it.

Now the other area that you've talked about.

You plan to fight it correctly not really national accounts, we still believe we can add huge value to our national account group, but more of the non core business that we outsource and we really act as a broker on and we are an aggregator for customers to come to.

And then we work with local providers to provide that service. There again that business is going to fall into one or two buckets and we're evaluating this right now it's going to be business that we want to self perform and we can add value and we can be the service provider and control the quality of the customer gets.

And the other part is going to be customers that we don't target on a daily basis, and we're 100% dependent upon those local providers too.

Service the customer.

That is too much of a risk for us and we don't want to jeopardize our relationship with big accounts that we don't control. The in service. So we are going to evaluate that aggregator business and we're going to decide how that will make sense for us on a go forward basis, and we will give you guys everybody on the call and update.

At the end of Q2 and that business today is broken broken into both snow.

And land and we're working with all of those partners on Snow. This year and then we're making determinations on land, which will be coming up for the summer in most markets. So I think that is two of them did you have another piece of it.

Well.

The idea of just portfolio review of your underlying customers and customer access the whole idea of addition by subtraction and anything you could do just maybe to clarify this won't make a little finer point is.

Is there is there a revenue number that like seems like a minimum that like just needs to not happen next year and we should be thinking about in our models as we look at them.

Yeah. Good question I think I would just say overall with roughly let's just call. It 50, 50 60 40, it depends on how much it snows our brokerage business is like we've said in the past is roughly about $100 million. So and we will give you an update on Q2. It gives you exactly how much we think we.

We can self perform and how much we will look at transitioning out on.

Unnamed Speaker: But you've classified it correctly, not really national accounts. We still believe we can add huge value to our national account group, but more of the non-core business that we outsource, and we really act as a broker on. And we are an aggregator for customers to come to, and then we work with local providers to provide that service.

On the other larger accounts I think our team has done a pretty good job continuing to mitigate some of the ones that as inflation work through the business. They werent price right. So the team continues to make some progress there. We do have some larger contracts that were done at a time that maybe it wasn't a full.

<unk> to be profitable growth and it was more to grow the business. So we've done some adjustments a few large municipal contracts with multiple years that we still have that we've got to work through but I would tell you and we should be able to.

Unnamed Speaker: There again, that business is going to fall into one or two buckets, and we're evaluating this right now. It's going to be a business that we want to self-perform, and we can add value. And we can be the service provider and control the quality of the customer gets. And the other part is going to be customers that we don't target on a daily basis, and we're 100% dependent upon those local providers. That is too much of a risk for us, and we don't want to jeopardize our relationship with big accounts that we don't control the end service.

So I'll run that business just with our sales efforts that we're doing if we're going to give you any headwinds from our revenue it's going to come really from that aggregator Bds business that you mentioned and we promise we'll get through the snow season, with our customers and we will give a full update once of our branches decide where and when.

They can best.

Self perform the work that we have but great question okay.

Okay.

Yes, that's super helpful. Okay, and then just my follow up here.

Unnamed Speaker: So we are gonna evaluate that aggregator business, and we're gonna decide how that will make sense for us on a go-forward basis. And we'll give you guys, everybody on the call, an update at the end of Q2. And that business today is broken into both snow and land. And we're working with all those partners on snow this year, and then we're making determinations on land, which will be coming up for the summer in most markets. So I think that hits two of them. Did you have another piece of it?

It has to do with snow so.

Obviously December was what it was to get to the low end of your guide you need $170 million of effectively here in the March quarter.

And so I guess as you sit here with a big snowstorm that hit through January how much more do you need in these last two months to get to that low end.

Yes, so we don't want to obviously give inter quarter numbers, but what we can indicate to everybody we have confidence in our range and we feel like Brad said in his opening comments, Andy where we are as we work through Q1 and January we feel we're pretty close to.

Unnamed Speaker: Well, this whole idea of just portfolio review of your underlying customers and customer access, the whole idea of addition by subtraction, and anything you could do just maybe clarify this a little and make a little finer point. Is there a revenue number that seems like a minimum that just needs to not happen next year and we should be thinking about in our models? Look at them.

Where we were last year, which makes us feel very comfortable that we will land in that range and I would just remind everybody.

Last year February and March were relatively low snowfall and thats still got us to $210 million of revenue.

Unnamed Speaker: Yeah, good question. I think I would just say, overall, roughly, let's just call it 50-50, 60-40. It depends on how much it snows. Our brokerage business, like we've said in the past, is roughly about $100 million. So, and we'll give you an update in Q2 that gives you exactly how much we think we can self-perform and how much we'll look at transitioning out. On the other larger accounts, I think our team has done a pretty good job continuing to mitigate some of the ones that, as inflation worked through the business, weren't priced right. So the team continues to make some progress there. We do have some larger contracts that were done at a time when maybe profitable growth wasn't a focus, and it was more to grow the business. So we've made some adjustments. We have some large municipal contracts with multiple years that we still have that we've got to work through.

So we actually think there could be more of that upside thats why we kept that range with a midpoint somewhere around 240, but we're very very comfortable Andy we're going to get in the low end minimum and probably more towards the midpoint of that range. When we think about it if it snows like what we've seen in the past in February and March.

Okay, I thought I thought I'd ask thanks, guys have a good day.

You bet. Thanks, Andy.

Our next question comes from Tim Mulrooney with Willie.

William Blair. Your line is open. Please go ahead.

Okay.

Yeah, Thanks, good morning, Dale and breadth.

Good morning, Tim Good morning, Tim.

So.

If I'm doing the math right it looks like the maintenance land business was down about 5% organically if you exclude that $3 two.

Unnamed Speaker: But I would tell you, Andy, we should be able to outrun that business just with our sales efforts that we're doing. If we're going to give you any headwinds from our revenue, it's going to come really from that aggregator BES business that you mentioned. And we promise we'll get through the snow season with our customers, and we'll give a full update once our branches decide where and when they can best self-perform the work that we have. But a great question. Yeah, that's super helpful. Okay, then just my follow up here. Um, it has to do with snow.

The acquisition Am I doing the math right there.

Yeah on the total Youre doing the math right, Tim it's down about $19 million for land.

For maintenance plan, yes, yes, excluding snow.

So my question is.

Did that hit your expectations or was it a little softer than you expected and I'm asking because based on the midpoint of your guide.

For this segment are about flat organic for the full year at starting the first quarter down $5 flat for the full year at the midpoint it looks like you'd be expecting a pretty strong.

Unnamed Speaker: So you guys, obviously, December is what it was. To get to the low end of your guide, you need $170 million effectively here in the March quarter. And so I guess, as you sit here with a big snowstorm that hit through January, how much more do you need in these last two months to get to that low end? Yeah, so we don't want to obviously give inner-quarter numbers. But what we can indicate to everybody, we have confidence in our range. And we feel, like Brett said in his opening comments, Andy, where we are, as we work through Q1 and January, we feel we're pretty close to where we were last year, which makes us feel very comfortable that we will land in that range. And I just want to remind everybody that last year, February and March had relatively low snowfall.

Second half of the year am I thinking about that the right way.

You are thinking about that the right way Tim you know as you as you look at our first quarter. We did we're not giving quarterly guidance. We came out last at the end of Q4 gave annual guidance. We tried to say the first couple of quarters, maybe a little choppy in them more towards the negative two or a little bit more than that and then in the back half of the year would be flat to the to the <unk>.

Positive and a couple of things to call out there in Q1, we did expect.

Right around where we land in the biggest piece that we really didn't talk a lot about at the end of Q4, and we're not really talking a lot about now but as the hurricane we had last year, we had hurricane hurricane Ian come through the southeastern part of the United States that was roughly half.

Our land mass came from that hurricane year over year comp.

Unnamed Speaker: And that still got us to 210 million in revenue. So we actually think there could be more of that upside. That's why we kept that range with a midpoint somewhere around 240. But we're very, very comfortable, Andy, we're going to get in the low end minimum, and probably more towards the midpoint of that range when we think about it, if it snows like what we've seen in the past in February and, Thanks guys, have a good day. You bet. Thanks, Andy. Our next question comes from Tim Mulrooney with William Blair. Your line is open, please go ahead.

And the other half is essentially what we expected by focusing on our core business deemphasizing, our noncore business and continuing to work through the profitable growth.

As I think as you move into the last nine months of the year I think you'd expect there won't be a comp for hurricane in Q2, but there will be some of that work still ongoing with.

Focusing on our core business.

Emphasizing as Dale mentioned, our noncore business, specifically, our aggregator business called <unk>.

And we are working through snow now, but when it comes to land will have a fulsome update here at the end of Q2, because we are actively working through negotiations with clients now and we expect those to be done primarily done here by the end of Q2, and we'll give an update on if any impact will come from that business, what that looks like for Q2, three and four.

Unnamed Speaker: Yeah, thanks. Good morning, Dale and Brett. Good morning, Tim.

Tim M. Mulrooney: So, Brett, if I'm doing the math right, it looks like the maintenance land business was down about 5% organically if you exclude that 3.5% million acquisition. Am I doing the math right there? Yeah, on the total, if you do the math right, Tim, it's about $19 million per acre for maintenance land. Yeah, yeah. Excluding snow. So my question is, Did that hit your expectations, or was it a little softer?

Okay I understand that was very clear. Thank you for walking me through that so.

So I got that I wanted to ask about.

Switching gears here, a little bit to the ancillary work, which I know you highlighted.

Some softness in the end client business this quarter.

And maybe you even made reference to it last quarter too I don't I don't remember, but.

Questions on the ancillary are number one curious what you think is driving that decline in demand would just be interested in your perspective.

Unnamed Speaker: And I'm asking because based on the midpoint of your guide for this segment for about flat organic for the full year, you know, you're starting the first quarter down five, flat for the full year at the midpoint. It looks like you'd be expecting a pretty strong, you know, second half of the year. Am I thinking about that the right way? You are thinking about that the right way, Tim. You know, as you look at our first quarter, we're not giving quarterly guidance. We came out last, at the end of Q4, and gave annual guidance. And we tried to say the first couple quarters might be a little choppy and more towards the negative 2 or a little bit more than that. And then the back half of the year would be flat to the positive end.

Because I know that's out of scope work can sometimes be helpful to margins and would assume that's something you'd like to see more of and number yes, but number two sorry.

What percent of your maintenance plan business would you estimate is a player revenue first based contract revenue I think I remember on the <unk>. It was like 70 525, I don't know if that ratio is still relevant.

Sorry to cut you off there Brian.

Yes, no problem, Tim sorry to cut you I'll start with the second question your ancillary to the total land revenue is about $75 25, maybe even 70 30.

Unnamed Speaker: But a couple things to call out there in Q1. We did expect right around where we landed. And the biggest piece that we really didn't talk a lot about at the end of Q4, and we're not really, you know, talking a lot about now, but it's the hurricane we had last year. We had Hurricane Ian come through the southeastern part of the United States.

Range of what's contract other specialty services versus pure ancillary. So that's kind of generally the way if you take the full land the land revenue.

But back to your original question, we did see declines in Q1 majority was Ian.

About the total.

Unnamed Speaker: That was roughly half of our land miss came from that hurricane year-over-year comp. And the other half is essentially what we expected by focusing on our core business, de-emphasizing our non-core business, and continuing to work through profitable growth. Tim, I think as you move into the last nine months of the year, I think you'd expect, you know, there won't be a comp for Hurricane and Q2, but there will be some of that work still ongoing with, focusing on our core business, de-emphasizing, as Dale mentioned, our non-core business, specifically our aggregator business called BES. And we are working through snow now, but when it comes to And we expect those to be done, you know, primarily done here by the end of Q2, and we'll give an update on, if any impact will come from that business, what that looks like for Q2, three, and four. Okay. That was very clear. Thank you for walking me through that.

Hurricane Ian that happened last year, I think about the total Q1 comp all of that Hurricane revenue was ancillary revenue that came through the southeastern part of the United States and as you sit here today.

Really didn't have any ancillary issue in Q4 coming out of last year, we don't expect to see any ancillary challenge is in the back half of this year or back three quarters of this year, our ancillary backlogs are at an all time high.

We some of that is dependent on seasonality and weather as we put it in the ground.

If it snowed a lot more here in Q2, we may do a little bit less ancillary in Q2, but the backlogs are at an all time high.

We look at that number which we track we don't disclose total, but a tough we're up roughly about 10% year over year, and what we're bidding and customers are buying.

Specifically in the land business.

Got it okay. So actually that's could be here, because I kind of think about that as a good sign that Matt generally folks are willing to spend a little bit more on this or that throughout the year. So so theres no no signs of a decline in demand. It's just yes, Tim I think that's I think that's it.

Unnamed Speaker: So, I got that. What I wanted to ask you is, We're switching gears here a little bit to the AIMS play work, which I know you highlighted. Some softness in the ancillary business this quarter, and maybe you even made reference to it last quarter, too. I don't I don't remember, but my questions on the ancillary are number one, curious what you think is driving that decline in demand. I would just be interested in your perspective and, Yeah, because I know that out of scope work can sometimes be helpful to margins and would assume that's something you'd like to see I think I remember on the ITPO, it was like 75-25.

Top issue.

Yeah, Q1 to hurricane comp issue for ancillary that's why we called it out in the Q, but as you think about that.

The health of the business the market, we see no signs of any type of weakness in the market, we see ancillary backlogs in our land business.

Up about 10% year over year, we see our new sales pipeline in the land business up year over year and if you look at our development business, we are seeing extreme positivity in that business.

Not only on the margin side, but from a revenue growth side its been six quarters in a row of really growing that business at mid single digit growth rates and our backlog for development is essentially sold through this year and we're selling into the first half of 2025 at this point. So we see really positive signs of momentum not only on the up.

Unnamed Speaker: I don't know if that ratio is still relevant. Sorry to cut you off. Yeah, no problem, Tim. Sorry to cut you off. I'll start with the second question.

Unnamed Speaker: Yeah, ancillary to the total land revenue is about 75 to 25, maybe even 70-30 range of what's contract, other specialty services versus pure ancillary. So that's kind of generally the way if you take the full land revenue. But back to the original question, we did see declines in Q1. The majority was Ian.

Selling on the land side of the business, but also on the development side of the business.

Got it. Thank you very much for taking my questions.

Thanks, Dan Thanks, Tim.

Our next question comes from Andrew Steinman with Jpmorgan. Your line is open. Please go ahead.

Unnamed Speaker: You know, if you think about the total Hurricane Ian that happened last year, think about the total Q1 comp, all that hurricane revenue was ancillary revenue that came through the southeastern part of the United States. And as you sit here today, you know, we really didn't have any ancillary issues in Q4 coming out of last year. We don't expect to see any ancillary challenges in the back half of this year or in the back three quarters of this year. Our ancillary backlogs are at an all-time high.

Yeah.

Hi, guys. This is Alex has on for Andrew Steinman, just wanted to dive into sort of the.

The tension between centralizing and Decentralising here in the business I know this isn't the first time.

Our view has made structural changes in.

What what rolls become centralized but rolls become decentralized there'll be maybe be helpful to.

To hear your thoughts on that and then I have a follow up question on capital allocation.

Unnamed Speaker: We, you know, some of that's dependent on seasonality and weather as we put it in the ground. If it snows a lot more here in Q2, we may do a little bit less ancillary in Q2, but the backlogs are at an all-time high. If you look at that number, which we track, we don't disclose the total, but it's up roughly 10% year over year in what we're bidding and customers are buying, and that's specifically in the land. Got it. Okay, so actually, that's good to hear because I kind of think of that as uh, a good sign of demand generally if folks are willing to spend a little bit more on this or that throughout That's why we called it out in the queue.

Yes, there is.

It is the number one way that we can add value to our field operations people by taking non customer facing work away from <unk>.

And centralizing it and allow them to spend more time with customers, which will inevitably help us be a better partner to our customers. So there are things Tim when we talk about interacting with the customer there for.

Im sorry, Alex that we definitely want to do at our branches and I want every branch focused on those customer facing activities and then there is the non value things that you have to do to process, whether it be AAP or collect a our support financial functions that we don't want our operators distracted.

We want them focused on customer facing work so.

I know that the company has gone back and forth from centralization of decentralized, but even when they decentralized stuff a lot of the area was just be centralizing it to different markets. It wasn't giving everything directly back to the branch.

Unnamed Speaker: But as you think about, you know, the health of the business, and the market, we see no signs of any type of weakness in the market. We see ancillary backlogs in our land business up about 10% year over year. We see our new sales pipeline in the land business up year over year. And if you look at our development business, you know, we are seeing extreme positivity in that business, not only on the margin side, but from a revenue growth side. It's been six quarters in a row of really growing that business at mid single-digit growth rates. And our backlog for development is essentially sold through this year, and we're selling into the first half of 2025 at this point. So we see really positive signs of momentum, not only on the upselling on the land side of the business but also on the development side. Thank you very much for taking my questions.

So if we're going to centralize, we're going to put the right way and we're going to bring it all the way top side, we can get the maximum value.

Got it that's very helpful and then thinking about capital allocation at a bright.

Bright view.

Obviously, there had been some some priorities here that maybe got you into some noncore businesses and led to some acquisitions that didnt scale. The way that they were desired just from like a metric standpoint.

How are you sort of thinking about measuring success in capital allocation and return on invested capital framework.

Is there anything sort of you see.

Thinking of how to measure success that maybe moves beyond these consolidated measures that you guys discussed.

Unnamed Speaker: Thanks Tim. Thanks Tim. Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open. Please go ahead. Hi guys, this is Alex Hasson on behalf of Andrew Steinerman.

Yes, I think I think you mentioned some of the challenges. We've had is we've deployed capitals.

We haven't traditionally been great stewards of that capital as we've deployed it.

Alex Hasson: I just wanted to dive into sort of the tension between centralizing and decentralizing here in the business. I know this isn't the first time that Brightview has made structural changes and what roles have become centralized, and what roles have become decentralized. Dale, it may be helpful to hear your thoughts on that. And then I have a follow-up question on capital allocation. It is the number one way that we can add value to our field operations people by taking non-customer-facing work away from them and centralizing it, and allowing them to spend more time with customers, which will inevitably help us be a better partner to our customers. So, there are things, Tim, when we talk about interacting with the customer, or I'm sorry, Alex, that we definitely want to do at our branches. And I want every branch to focus on those customer-facing activities. And then there's the non-value things that you have to do to process, whether it be AP or collect AR or support financial functions that we don't want our operators distracted by.

Our M&A process that the first thing I did with the team and I am So happy with the progress we've made as tap the brakes on M&A because like I've said M&A is not just a financial move.

It has to fit the company strategically and culturally as much as just making the math work and even the process for integrating that M&A that we've done in the past when we buy a company we have to own that company and be a better owner of that asset immediately we can't have earn outs, we can't just let the asset.

<unk> out there for a period of time before they become part of the breakthrough team.

Our M&A process is going to drastically change.

And our field operators are right now reviewing we have over $700 million of potential.

Potential M&A and our group has reviewed it to say, which one of these potential target make the most sense for us to bring into our company that we can be a better owner and they can help us that we can grow the revenue faster or drive more efficiency and create bottom line returns we haven't done that in the past.

That is a major shift for us I am a huge believer in M&A, but M&A has to be done the right way it can't be a financial calculation that nobody that understands the business and the people that work there.

Unnamed Speaker: We want them focused on customer-facing work. So, I know that the company's gone back and forth from centralization to decentralization, but even when they decentralized stuff, a lot of the area was just decentralizing it to different markets. It wasn't giving everything directly back to the branch.

Actually are involved in the decisions. So it is changing and look we've got a monitor M&A and how we're a better owner we've got to make sure post deals we know what improvements, we're making to make more EBITDA and more revenue on the business that we acquire.

Got it that's very helpful and then maybe to wrap up.

Unnamed Speaker: So if we're going to centralize, we're going to do it the right way, and we're going to bring it all the way up top so we can get the maximum value. Got it. That's very helpful. And then thinking about capital allocation at Brightview, you know, obviously, there have been some priorities here that maybe got you into some non-core businesses and, you know, led to some acquisitions that didn't scale the way that they were desired. Just from a metric standpoint, you know, how are you sort of thinking about measuring success in capital allocation, the return on invested capital framework? You know, is there anything you're thinking about how to measure success that maybe moves beyond these consolidated measures that you guys discussed?

Can you highlight any sort of tangible or intangible strategic assets that when you look at bright view now from your sort of outside are becoming an insider vantage.

These are these are these are true strategic and competitive assets or that are distinct from our competitors and distinct from the market in the market.

Okay.

Question I would tell you.

What excites me most about this is the closer I visited.

Not quite a third of our branches, but I've been spending most of my first 120 days out interacting with our frontline team.

The closer you get to the customer the more dedicated they are to what they do everyday to make sure they deliver the right service.

As a corporation is as a company have to provide them the tools and resources they need.

Unnamed Speaker: I think you mentioned some of the challenges we've had as we've deployed capital. We haven't traditionally been great stewards of that capital as we've deployed it. So our M&A process, the first thing I did with the team, and I am so happy with the progress we've made, is tap the brakes on M&A because, like I've said, M&A is not just a financial move. It has to fit the company strategically and culturally, as much as just making the math work.

We have to upgrade some of our fleet, we have to get them better mowers, we have to get them tools and training and safety equipment. So every day when they are out servicing our customers our customers understand why we're the best provider in this industry.

Why you heard from Brett we're going to take those proceeds that we got from U S launch, we're going to reinvest that back in the business to make sure those frontline employees get the benefits that they deserve and they can service the customers and that's the most positive part of this business and yes, we had some different.

Unnamed Speaker: And even the process for integrating the M&A that we've done in the past, when we buy a company, we have to own that company and be a better owner of that asset immediately. We can't have earnouts; we can't just let the asset linger out there for a period of time before they become part of the Brightview team. So, our M&A process is going to drastically change, and our field operators are right now reviewing it. We have over $700 million of potential M&A, and our group has reviewed it to say which one of these potential targets makes the most sense for us to bring into our company so that we can be a better owner and they can help us, that we can grow their revenue faster or drive more efficiency and create bottom-line returns. We haven't done that in the past, and that is a major shift for us. I am a huge believer in M&A, but it has to be done the right way. It can't be a financial calculation that nobody understands the business, and the people that work there are actually involved in the decision.

Segments of our business that might've been a little siloed with as we announced we're integrating golf and tree, but even those businesses have dedicated people that are experts in what they do but when we bring all the resources, we have together and they all work seamlessly Gordon to market to our customers nobody can.

Pete with breakthrough we have experts from turf the development to treat care to irrigation to general land maintenance, we have the best people in the industry and I see that everyday when I visit the branches. So that is our secret sauce. We just have to support those people. So they can spend more time doing what they do.

Best every day.

Thank you.

You bet. Thanks, Alex.

As a reminder, if you'd like to ask any questions. Please press star one on your telephone keypad now.

We now plan to you Stefan move with Jefferies. Your line is open. Please go ahead.

Hello, This is <unk> on for Stephanie anymore.

Unnamed Speaker: So, it is changing, and look, we've got to monitor M&A and how we're a better owner. We've got to make sure, post-deal, we know what improvements we're making to make more EBITDA and more revenue on the business that we acquire. Got it, that's very helpful.

Yes so.

Development saw some particular strength in the business, but just wanted to get an idea.

What are some of the drivers.

Turning to the development business this year and do you expect those to be carried over.

Throughout the rest of the year.

Yes, So I think I think it was Harold you broke up a little bit, but our development business. Obviously has been the benefactor of what the country is seen on the construction cycle over the last couple of years and some of those Mega projects that you heard a lot of people talk about as they come towards the end and we'll continue.

Unnamed Speaker: And then maybe to wrap up, can you highlight any sort of tangible or intangible strategic assets that when you look at Brightview now from your sort of outsider becoming an insider vantage point, you say, oh, these are these are these are true strategic and competitive assets that are distinct from our competitors and distinct in the market? I would tell you, what excites me most about this is that I've visited, you know, not quite a third of our branches, but I've been spending most of my first 120 days out interacting with our frontline team. The closer you get to the customer, the more dedicated they are to what they do every day to make sure they deliver the right service.

To come towards the end for the next year and a half we offer one of the top 50 specialized.

Construction companies in North America that can actually support the final stages of those projects. So that team is is very hitting the stride right now they have a great backlog, we're winning new jobs every day and we will continue to see that demand as Bret said well into 2025 as we continue to bid work.

Unnamed Speaker: We, as a corporation, as a company, have to provide them with the tools and resources they need. We have to upgrade some of our fleet. We have to get them better mowers.

So that business has been a huge huge benefactor of all the construction that's gone on over the last 24 months. So we are very optimistic about development.

Unnamed Speaker: We have to get them tools, training, and safety equipment so every day when they're out servicing our customers, our customers understand why we're the best provider in this industry. That's why you heard from Brett, we're going to take those proceeds that we got from U.S. Lawns, and we're going to reinvest that back into the business to make sure those frontline employees get the benefits that they deserve, and they can service the customers. And that's the most positive part of this business. And yes, we had some different segments of our business that might have been a little siloed with, as we announced, we're integrating golf and trees. But even those businesses have dedicated people that are experts in what they do.

Thank you.

Just hang on.

Even though margin how should we think about the cadence of EBITDA margin.

Yes in the year for you to know.

That's 40 to 80 basis points.

No.

Just any insight on the cadence for the rest of it.

Thank you.

Yes, great. Great question look I think when you look at when you look at Q1, if not for the timing of snowfall our margin would have been right at our our guided range of the total company for the year of 40 to 80 basis points would have actually been at the higher end of that range of 60 to 80 basis points. So.

Unnamed Speaker: But when we bring all the resources we have together, and they all work seamlessly, go into the market to our customers, nobody can compete with Brightview. We have experts from turf to development, to tree care, to irrigation, to general land maintenance. We have the best people in the industry, and I see that every day when I visit branches. So that is our secret sauce. We just have to support those people so they can spend more time doing what they do best every day.

A little bit is just the timing of snow in Q1 and how that.

But our guide would be then for the full year snow holding at $2 10 to $2 70 would imply that thats no shortfall in Q1 would come back in Q2, and therefore, we would see that margin rebound here in Q2, and as you think about quarter to quarter you know we're not.

Again, providing quarterly guidance, but as we look at the full year, we feel strong sitting here today with some of the actions we've taken towards one bright view and to align the business and the momentum we're seeing in the underlying core business in land and the momentum we're seeing in our development business and some of the cost structure changes remain incorporate that for the <unk>.

All year guide, we feel confident in that 60% to 40% 40 to 80 basis points total margin expansion for the business.

Thank you that's all my questions.

Unnamed Speaker: Thank you. You bet. Thanks, Alex. As a reminder, if you'd like to ask any questions, please press star 1 on the telephone keypad now. We now turn to Stephan Moore with the Jefferies. Your line is open, please go ahead. Hello, this is Harold Antel on behalf of Stephanie.

Alright, thank you.

Our next question comes from George Tong with Goldman Sachs. Your line is open. Please go ahead.

Hi, Thanks, Good morning Hugh.

Integrated your full year guide despite the sale of U S lawn and the shortfall in snow revenue in fiscal in Q can you elaborate on some of the assumptions around snow in the land business for the rest of the year that you're incorporating into your full year guide.

Unnamed Speaker: Um, yeah, so, to the only source. Thank you. Thank you. I just wanted to get an idea of, you know, what some of the drivers are here. Do you expect us to be carried on? Yeah, so Harold, I think I think it was Harold, you broke up a little bit.

Yes, I think George Great question.

Like <unk>.

<unk> our full guide we also feel exactly where we felt after we've worked through January on snow with that range of $210 million to $270 million of snow.

Unnamed Speaker: But our development business obviously has been the beneficiary of what the country's seen in the construction cycle over the last couple years. And some of those mega projects that you've heard a lot of people talk about, as they come towards the end, and will continue to come towards the end for the next year and a half. We offer one of the top 50 specialized construction companies in North America that can actually support the final stages of those projects. So that team is really hitting its stride right now. They have a great backlog.

So we will update everybody, where we finished once we get past the snow season, but like I had said earlier, where we sit today, we still feel that way.

Guide, we gave you we'll come in despite the shortfall we felt in Q1, but the activity. We saw in January so snow, we feel good about and overall with U S launch U S. Lawns was a strategic sale with $11 million of revenue at a double digit.

Multiple that we got $52 million for so you can do some quick math there. We believe we can still step over that incremental three quarters of the EBITDA that that business would have generated it's somewhat de minimis with the multiple we got so we feel good about the momentum that we have as we go through the year. So we.

Unnamed Speaker: We're winning new jobs every day, and we'll continue to see that demand, as Brett said, well into 2025, as we continue to bid work. So that business has been a huge, huge benefactor of all the construction that's gone on over the last 24 months. So we are very optimistic about development. Thank you.

Not concerned that that's going to have a negative effect either on revenue or on EBITDA for our full year guide overall.

Unnamed Speaker: And then, um, just on, um, even the margin, um, how should you think about the cadence of even the margin throughout the rest of the year for you to hit, you know, 40 to 80 patients, on, you know, just any insight into life on the cadence of it for the rest of the hopefully, Yeah, great, great question. Look, I think when you look at, when you look at Q1, if not for the timing of snowfall, our margin would have been right at our, our guided range of the total company for the year of 40 to 80 basis points would actually have been at the higher end of that range of 60 to 80 basis points. So, a little bit is just the timing of snow in Q1 and how that, what our guide would be then for the full year snow holding at 210 to 270 would imply that that snow shortfall in Q1 would come back in Q2, and therefore, we'd see that margin rebound here in Q2.

Okay. That's helpful. And then development revenue growth of 6% came above your full year guide range of 2% to 5% for the segment can you discuss your growth expectations for development for the rest of the year any timing considerations or comp issues to be mindful of.

So I'll start with that and I'll, let Brett just at a high level. The one thing I would say the benefit that.

Or the B the lack of benefit we saw in snow that we told everybody. We didn't see a lot of snow until January that means that the construction season can actually be.

Running a little longer into the year, So our development group.

The benefit of that so they did have an outstanding quarter with that growth and I would just say in Q2, depending on what we see for snow that could trim that down year over year, especially last year like I said snow in February and March was relatively light, so, but Brett you want to add anything George typically development slowest.

Unnamed Speaker: As you think about quarter to quarter, you know, we're not again providing quarterly guidance, but as we look at the full year, we feel strong sitting here today with some of the actions we've taken towards One Bright View and to align the business and the momentum we're seeing in the underlying core business and land, and the momentum we're seeing in our development business, and some of the cost structure changes we've made in corporate, that for the full year Thank you. All right, thank you. Our next question comes from George Tong with Goldman Sachs. Your line is open. Please go ahead.

Quarters Q2, same with our land business. So as you think about seasonality in snow et cetera, Q2's, a bit lower if you think about last Q2 were essentially flat in the business just given timing of projects and seasonality. So we do still expect ex.

That full year revenue guide of 2% to 5% for the year.

Q2, being a little bit a little bit less in Q1, and then as you look back in the back half of the year being kind of in the middle of that guide. So we're still bullish on that business. We are essentially sold through 2024, and our backlogs were selling into 2025, there could be some quarterly noise just getting projects in the ground, but at the end of the day, we feel.

Unnamed Speaker: Hi, thanks. Good morning. You've reiterated your full-year guide, despite the sale of U.S. lawn and the shortfall in snow revenue in fiscal 1Q. Can you elaborate on some of the assumptions around snow and the land business for the rest of the year that you're incorporating into your full-year guide? Yeah, I think we, George, a great question.

We feel great about that business and really the momentum in the overall company.

And as you think about us reaffirming guidance, we sit here today excited by the fact that this will be a breakthrough year for bright view, especially with EBITDA and EBITDA margin expansion.

And despite what happened in Q1 timing of snow or despite what happened with stepping over a tough comp with the hurricane.

Unnamed Speaker: Like, reiterating our full guide. We also feel exactly where we felt after we worked through January on snow with that range of 210 to 270 million tons of snow. So we will update everybody where we are once we get past the snow season. But like I said earlier, where we sit today, we still feel when this guide we gave you will come in despite the shortfall we felt in Q1 but the activity we saw in January. So snow we feel good about and overall with U.S. lawns. U.S. lawns was a strategic sale with $11 million of revenue at a double digit multiple that we got $52 million for. So you can do some quick math there.

Really feel confident that getting EBITDA at a breakthrough year. This year for the company as where we're reaffirming and we feel we feel optimistic about that.

Very helpful. Thank you.

Thanks George.

This concludes our Q&A I'll now hand back to Taylor CEO for closing remarks.

Thank you operator.

As everyone can tell we are very excited about the opportunities ahead, and I'm thrilled to be leading this great company through this important period.

Our objectives are clear.

Unnamed Speaker: We believe we can still step over that incremental three quarters of the EBITDA that that business would have generated. It's somewhat de minimis with the multiple we got. So we feel good about the momentum that we have as we go through the year. So we are not concerned that that's going to have a negative effect either on revenue or on EBITDA for our full year guidance overall. That's helpful.

We are committed to becoming one breakthrough.

Growing profitably and creating meaningful shareholder value.

Thank you and operator, you may end the call.

Ladies and gentlemen, today's call is now concluded wed like to thank you for your participation you may now disconnect your lines.

[music].

Unnamed Speaker: And then development revenue growth of 6% came above your full year guide range of 2 to 5% for the segment. Can you discuss your growth expectations for development for the rest of the year? Any timing considerations or top issues to be mindful of? So I'll start, but then I'll let Brett.

Unnamed Speaker: Just at a high level, the one thing I would say, the benefit that, or the lack of benefit we saw in snow, that we told everybody we didn't see a lot of snow until January, that means that the construction season can actually be running a little longer into the year. So our development group gets the benefit of that. So they did have an outstanding quarter with that growth. And I would just say in Q2, depending on what we see for snow, that could trim that down year over year, especially last year. As I said, snow in February and March was relatively light. So, but Brett, do you want to add anything?

Okay.

Yes.

Yes.

Yes.

Okay.

Unnamed Speaker: Yeah, George, typically, development's lowest quarter is Q2, same with our land business. So as you think about seasonality and snow, et cetera, Q2 is a bit lower. If you think about last Q2, we were essentially flat in the business, just given the timing of projects and seasonality. So we do still expect that full year revenue guide of 2 to 5% for the year, Q2 being a little bit less than Q1. And then, as you look back on the back half year, being right kind of in the middle of that guide.

Unnamed Speaker: So, again, we feel bullish on that business. We are essentially sold through 2024 in our backlogs. We're selling into 2025. There could be some quarterly noise, just getting projects in the ground.

Unnamed Speaker: But at the end of the day, we feel great about that business and really the momentum in the overall company. And if you think about us reaffirming guidance, we sit here today excited by the fact that this will be a breakthrough year for Brightview, especially with EBITDA and EBITDA margin expansion. And despite what happened in Q1, the timing of the snow, or despite what happened with stepping over a tough comp with a hurricane, we really feel confident that getting EBITDA at a breakthrough year this year for the company is where we're reaffirming. And we feel, you know, we feel optimistic about it. Very helpful. Thank you. Thanks, George.

Dale Asplund: This concludes our Q&A. I'll now hand it back to Dale Asplund, CEO, for closing remarks. Thank you, operator. As everyone can tell, we are very excited about the opportunities ahead, and I'm thrilled to be leading this great company through this important period. Our objectives are clear. We are committed to becoming one bright company, growing profitably, and creating meaningful shareholder value. With that, thank you, and Operator, you may end the call. Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation.,