Q2 2024 BrightView Holdings Inc Earnings Call

Operator: Good morning everyone, and welcome to the BrightView Holdings second quarter 2024 earnings call. After today's presentation, we will begin the Q&A session. To register a question, please press star followed by 1 on your telephone keypad. To withdraw your question, please press star followed by 2. With that, I'll turn the conference over to Chris Stoczko. Please go ahead when you're ready.

Good morning, everyone and welcome to the bright view holding second quarter 2024 earnings call.

After today's presentation, we will begin the Q&A session.

To Register a question. Please press star followed by one on your telephone keypad to withdraw your question. Please press star followed by two.

With that I'll turn the conference over to Chris <unk>. Please go ahead, when you're ready.

Chris Stoczko: Good morning, and thank you for joining BrightView's second quarter fiscal 2024 earnings call. Dale Asplund, BrightView's President and Chief Executive Officer, and Brett Urban, BrightView's Chief Financial Officer, are on the call.

Chris: Good morning, and thank you for joining bright view second quarter of fiscal 2024 earnings call.

Chris: Dale Asplund, breakthroughs, President and Chief Executive Officer, and Bret Ervin Chief Financial Officer are on the call.

Chris Stoczko: I will now refer you to Slide 2 of the presentation, which can also be found on our Investor Relations website and contains our Safe Harbor disclaimer. Our presentation and today's call include forward-looking statements subject to certain risks and uncertainties. In addition, during the call, we'll refer to certain non-GAAP financial measures. Please see our press release in the 8K issued yesterday for a reconciliation of these non-GAAP financial measures. I will now turn the call over to Dale.

Chris: I'll now refer you to slide two of the presentation, which can also be found on our Investor Relations website and contains our safe Harbor disclaimer our presentation and today's call include forward looking statements subject to certain risks and uncertainties. In addition, during the call we'll refer to certain non-GAAP financial measures.

Chris: Please see our press release and 8-K issued yesterday for a reconciliation of these non-GAAP financial measures I will now turn the call over to Dale.

Dale A. Asplund: Thank you, Chris, and good morning, everyone. I'd like to begin by briefly reflecting on my first seven months as CEO. We have made incredible progress in such a short period of time, and our organization's ability to absorb these changes has been exceptional. As I sit here today, I am even more enthusiastic than I was on day one about the incredible opportunities ahead of us.

Dale A. Asplund: Thank you, Chris and good morning, everyone.

Dale A. Asplund: I'd like to begin by briefly reflecting on my first seven months as CEO.

Dale A. Asplund: We have made incredible progress in such a short period of time in our organization's ability to absorb these changes has been exceptional.

Dale A. Asplund: As I sit here today.

Dale A. Asplund: I'm, even more enthusiastic than I was on day, one about the incredible opportunities ahead of us.

Dale A. Asplund: I have the utmost confidence that all the changes we are making to transform this business are the right long-term decisions to operate as a unified OneBrightView, drive profitable growth, and create shareholder value. I will start today on slide four by emphasizing our achievements and ongoing progress, along with strategic updates that will enhance our position to accomplish our objective. Through the first half of the year, our commitment to executing our strategic vision and focusing on profitable growth has proven successful.

Dale A. Asplund: I have the utmost confidence that all the changes we are making to transform this business are the right long term decisions to operate as a unified one bright view drive profitable growth and create shareholder value.

Dale A. Asplund: I will start today on slide four by emphasizing our achievements and ongoing progress.

Dale A. Asplund: Along with strategic updates that will enhance our position to accomplish our objectives.

Dale A. Asplund: Through the first half of the year, our commitment to executing our strategic vision and focusing on profitable growth has proven successful.

Dale A. Asplund: As a result, we are reaffirming our full year EBITDA midpoint and raising our margin in our free cash flow guide, all while selling our franchise business, unwinding our non-core aggregator business, and Snowfall coming in at the low end of our original guidance.

Dale A. Asplund: As a result.

Dale A. Asplund: We are reaffirming our full year EBITDA midpoint in raising our margin and free cash flow guidance.

Dale A. Asplund: All while selling our franchise business.

Dale A. Asplund: While unwinding, our noncore aggregator business.

Dale A. Asplund: And snowfall coming in at the low end of our original guidance range.

Dale A. Asplund: We have seen meaningful growth in profitability and margin expansion and are gaining momentum in our business as we continue to implement our strategy of operating as one bright. As we move forward, we are confident that the actions we are taking will improve our ability to deliver on our strategic initiatives and enhance our position as the number one player in the commercial landscape. After a strong beginning in Q1, we continued our momentum in Q2, marked by margin improvement across all our operating sectors.

Dale A. Asplund: We have seen meaningful growth in profitability and margin expansion.

Dale A. Asplund: And are gaining momentum in our business as we continue to implement our strategy of operating as one Bryan Pugh.

Dale A. Asplund: As we move forward, we are confident that the actions we are taking will improve our ability to deliver on our strategic initiatives and enhance our position as the number one player in the commercial landscape industry.

Dale A. Asplund: After a strong beginning in Q1.

Dale A. Asplund: We continued our momentum in Q2 marked by margin improvement across all our operating segments.

Dale A. Asplund: This reflects the early returns on our actions and investment in operating as One Bright. Also contributing to our results and outlook is our focus on the core business while de-emphasizing the non-core. On our Q1 call, we discussed the divestiture of our U.S. lawns, which we sold at a highly attractive low teens multiple. Additionally, we have evaluated and are actively unwinding our non-core aggregator business known as BES. It's important to note that this action will have no impact on our bottom line.

Dale A. Asplund: This reflects the early returns on our actions and investment and operating as one bright view.

Dale A. Asplund: Also contributing to our results.

Dale A. Asplund: Outlook is our focus on the core businesses.

Dale A. Asplund: While deemphasizing the noncore.

Dale A. Asplund: On our Q1 call we discussed the divestiture of our U S launch business, which we sold at a highly attractive.

Dale A. Asplund: So teams multiple.

Dale A. Asplund: Additionally, we have evaluated and are actively unwinding, our noncore aggregator business known as <unk>.

Dale A. Asplund: It is important to note. This action will have no impact on our bottom line Brett.

Dale A. Asplund: Brett will discuss the full impact of this unwind during the financial segment of today's call. Ultimately, this decision stems from our commitment to operate as a unified BrightView, maintain a high-quality brand reputation, and focus on our self-performing core business. During the quarter, we introduced initial programs aimed at prioritizing the safety and well-being of our employees, notably our Boots program.

Dale A. Asplund: Brett will discuss the full impact of this unwind during the financial segment of today's call.

Dale A. Asplund: Ultimately.

Dale A. Asplund: This decision stems from our commitment to operate as a unified bright view.

Dale A. Asplund: Maintained high quality brand reputation and focus on our self performing core businesses.

Dale A. Asplund: During the quarter, we introduced initial programs aimed at prioritizing the safety and well being of our employees, notably our boots program.

Dale A. Asplund: Additionally, we advance the OneBrightView culture by streamlining our operating structure to reinforce our revitalized go-to-market strategy under a less-is-more approach. These initiatives are designed to inspire our frontline employees, enhance our ability to service customers, and underscore BrightView's dedication and progress towards operating as one BrightView. On slide five, I'll showcase our boots program in partnership with Red Wing Shoes to equip over 18,000 team members with high-quality footwear, further highlighting our investment in our team.

Dale A. Asplund: Additionally, we advanced the one bright view culture by streamlining our operating structure to reinforce our revitalized go to market strategy under a less is more approach.

Dale A. Asplund: These initiatives are designed to inspire our frontline employees.

Dale A. Asplund: To enhance our ability to service customers.

Dale A. Asplund: And underscore bright views dedication and progress towards operating as one bright view.

Dale A. Asplund: On slide five I'll showcase our booth program in partnership with Red wing shoes to equipped over 18000 team members with high quality footwear.

Dale A. Asplund: Further highlighting our investment in our team.

Dale A. Asplund: Our dedication to providing team members with the best personal protective equipment is not only an investment in their safety and well-being but also inspires them to deliver exceptional service to our customers. As you can see from the picture on the right, employee reaction has been incredible. This picture shows Carlos Ochoa from our Owners County, California branch receiving his pair of boots and is one example of countless inspirational moments this initiative created where we truly focus on prioritizing our employees. Moving to slide six.

Dale A. Asplund: Our dedication to providing team members with the best personal protective equipment is not only an investment in their safety and wellbeing, but also inspires them to deliver exceptional service to our customers.

Dale A. Asplund: As you can see from the picture on the right employee reaction has been incredible. This picture reflects Carlo <unk> Choi from our owners County, California branch, receiving his pair of boots and as one example of countless inspirational moments. This initiative created where we can.

Dale A. Asplund: Truly focus on prioritizing our employees.

Dale A. Asplund: Moving to slide six.

Dale A. Asplund: Let's discuss our streamlined operating structure. So far this year, we implemented significant measures to enhance our go-to-market strategy as we operate as one BrightView. Central to these efforts was the realignment of our operating structure, aimed at ensuring optimal market and customer coverage while maximizing efficiency and effectiveness. This structure allows for fewer layers and removes silos and puts us closer to our customers by eliminating inefficiencies and aligning under one BrightView.

Dale A. Asplund: Let's discuss our streamlined operating structure.

Dale A. Asplund: So far this year, we implemented significant measures to enhance our go to market strategy as we operate as one bright view set.

Dale A. Asplund: Central to these efforts was the realignment of our operating structure aimed at ensuring optimal market and customer coverage, while maximizing efficiency and effectiveness.

Dale A. Asplund: This structure allows for fewer layers and remove silos and puts us closer to our customers by eliminating inefficiencies and aligning under one bright view this improve structure enhances our capabilities with both new and existing customers at.

Dale A. Asplund: This improved structure enhances our capabilities with both new and existing customers. At the market level, our maintenance and development segments are now aligned, fostering meaningful growth opportunities. Our sales and operations are now integrated at the branch level, reinforcing our focus on cross-selling opportunities. Additionally, we have elevated one of our most seasoned leaders into our chief commercial officer, overseeing all aspects of growth.

Dale A. Asplund: At the market level are maintenance and development segments are now aligned fostering meaningful growth opportunities our sales and operations are now integrated at the branch level reinforcing our focus on cross selling opportunities.

Dale A. Asplund: Additionally, we also elevated one of our most seasoned leaders into our chief commercial officer, overseeing all aspects of growth.

Dale A. Asplund: Positioning ourselves for success is paramount, and I am confident these actions will drive us forward and lead to enhanced service and profitable growth. Before turning the call over to Brett to discuss our financial results for the quarter, I want to summarize on slide seven how what we are doing today at BrightView is positioning us for sustainable success over the long term. As the nation's largest provider in our industry, there is tremendous opportunity to leverage our size and scale to unlock growth in our business and gain market share. Our streamlined operations and go-to-market strategy as OneBrightView will allow us to begin to convert more development services into reoccurring maintenance work. This is a simple example of a previously untapped opportunity.

Dale A. Asplund: Positioning ourselves for success is Paramount and I am confident these actions will drive us forward and lead to enhanced service and profitable growth.

Dale A. Asplund: Yeah.

Dale A. Asplund: Before turning the call over to Brett to discuss our financial results for the quarter I want to summarize on slide seven how what we are doing today bright view is positioning us for sustainable success over the long term.

Dale A. Asplund: As the nation's largest provider in our industry. There is tremendous opportunity to leverage our size and scale to unlock growth in our business and gain market share.

Brett: Our streamlined operations and go to market strategy as one bright view will allow us to begin to convert more development services in the reoccurring maintenance work.

Brett: This is a simple example of a previously untapped opportunity in order to maximize our potential and capitalize on our opportunities we.

Dale A. Asplund: In order to maximize our potential and capitalize on our opportunities, we must be the best at what we do and provide best-in-class service to our customers. By simplifying our customer satisfaction survey and leveraging predictive AI technology, we have significantly improved our communication with customers and our ability to proactively service them. These efforts, combined with investments in our employees, are aimed at driving higher customer retention. We also have the opportunity to optimize our customer and market penetration as we enhance our footprint and strategic approach to winning large accounts and sales efforts.

Brett: Must be the best at what we do and provide best in class service to our customers.

Brett: By simplifying our customer satisfaction survey and leveraging predictive AI technology, we have significantly improved our communication with customers and our ability to proactively service their needs.

Brett: These efforts combined with investments in our employees are aimed at driving higher customer retention.

Brett: We also have the opportunity to optimize our customer and market penetration as we enhance our footprint and strategic approach to winning large accounts and sales efforts.

Dale A. Asplund: Clearly, we are excited about our business and the significant opportunities ahead. Our enthusiasm mirrors the meaningful growth and profitability we have achieved through Q2 and our progress towards becoming one BrightView. But, there is more to do.

Brett: Clearly we are excited about our business and the significant opportunities ahead are.

Brett: Our enthusiasm mirrors, the meaningful growth and profitability, we have achieved through Q2, and our progress towards becoming one bright view.

Brett: While there is more to do I am proud of the team's effort and increasingly confident in our ability to deliver value to our shareholders with that I'll turn it over to Brett who will discuss our financial performance and outlook.

Dale A. Asplund: I am proud of the team's effort and increasingly confident in our ability to deliver value to our shareholders. With that, I'll turn it over to Brett, who will discuss our financial performance and, Thank you, Dale, and good morning to everyone. I'll start on slide nine.

Brett: Thank you Dale and good morning to everyone I'll start on slide nine.

Brett Urban: I'm pleased to report that we are continuing the momentum in our business and progressing with our strategy towards one BrightView, which yielded strong results in the second quarter. We remain focused on the execution of our strategy and profitable growth in our core business, as evidenced by the unwinding of an unprofitable non-core aggregator business and the sale of our franchise U.S. lawns business. These actions led to quality revenue, EBITDA growth, and significant margin expansion across all segments of the business.

Brett: I am pleased to report that we are continuing the momentum in our business and progressing with our strategy towards one bright view, which yielded strong results in the second quarter.

Brett: We remain focused on the execution of our strategy and profitable growth in our core business evidenced by the unwinding of the unprofitable noncore aggregator business and the sale of our franchise U S lawns business.

Brett: These actions led to quality revenue EBITDA growth and significant margin expansion across all segments of the business.

Brett Urban: Enhanced networking capital, coupled with the timing of capital investments and reduced interest expense, resulted in a meaningful increase in free cash flow compared to the first half of last year. This resulted in a net leverage ratio of 2.4 times, allowing for financial flexibility for ongoing execution and investment in the core business. Moving to slide 10.

Brett: Enhanced networking capital coupled with the timing of capital investments and reduced interest expense resulted in a meaningful increase of free cash flow compared to the first half of last year.

Brett: This resulted in a net leverage ratio of two four times, allowing for financial flexibility for ongoing execution and investment in the core business.

Brett: Moving to slide 10.

Brett Urban: Total revenue during the quarter increased 3.5% year-over-year to $673 million. Our non-core businesses, including BES and U.S. Lawns, and our focus on profitable growth within our core land business both had a near-term impact on our land revenue. We remain, however, very encouraged by the underlying health of the market and recent trends within our business. Revenue growth during the quarter was driven by higher snowfall relative to the prior year.

Brett: Total revenue during the quarter increased three 5% year over year to $673 million.

Brett: Our non core businesses, including Bds and U S lawns, and our focus on profitable growth within our core land business. Most had a near term impact on our land revenue.

Brett: We remain however, very encouraged by the underlying health of the market and recent trends within our business.

Brett: Revenue growth during the quarter was driven by higher snowfall relative to the prior year.

Brett Urban: Important to note, snow revenue year-to-date is comparable to the prior year season and at the low end of our original guidance range. We continue to see solid demand in our development business, which grew 5.7% compared to the prior year. Due to our ability to convert our robust backlog, Development's performance in recent quarters reflects the appealing nature of the business model, while also furthering the momentum for future growth as we capitalize on cross-selling into meat.

Brett: Important to note snow revenue year to date is comparable to the prior year season and at the low end of our original guidance range.

Brett: We continue to see solid demand in our development business.

Brett: Which we grew five 7% compared to the prior year.

Brett: Due to our ability to convert our robust backlog developed.

Brett: Developments performance in recent quarters reflects the appealing nature of the business model, while also furthering the momentum for future growth as we capitalize on cross selling into maintenance.

Brett Urban: Turning Down a Profitability and the details on slide 11. Total adjusted EBITDA for the second quarter was $64.8 million, an increase of $18 million, or 39% versus the prior year, and a significant margin expansion of 240 basis points, reflecting continued benefits of our One BrightView initiatives and improved profitability in all segments of the business. In the maintenance segment, total adjusted EBITDA of $66.5 million was an increase of $15 million, or 29%, compared to the prior year.

Brett: Turning now to profitability and the details on slide 11.

Brett Urban: This increase was driven by improved profitability and our core land maintenance business, and increased snowfall compared to the prior year. The adjusted EBITDA margin expanded an impressive 260 basis points due to revenue growth and a more streamlined operating structure. In the development segment, adjusted EBITDA for the second quarter was $14.4 million, an increase of 10% compared to the prior year, and adjusted EBITDA margins expanded 40 basis points. This is a result of quality backlog conversion while simultaneously reducing our costs, ultimately resulting in accretive growth.

Brett: Total adjusted EBITDA for the second quarter was $64 $8 million, an increase of $18 million or 39% versus the prior year and significant margin expansion of 240 basis points, reflecting continued benefits of our one <unk> initiatives and improved profit.

Brett: Ability in all segments of the business.

Brett: In the maintenance segment total adjusted EBITDA of $66 $5 million.

Brett: Was an increase of $15 million or 29% compared to the prior year.

Brett: This increase was driven by improved profitability in our core land maintenance business and increased snowfall compared to the prior year.

Brett: The adjusted EBITDA margin expanded an impressive 260 basis points due to the revenue growth and a more streamlined operating structure.

Brett: And the development segment adjusted EBITDA for the second quarter was $14 4 million, an increase of 10% compared to the prior year.

Brett: And adjusted EBITDA margins expanded 40 basis points.

Brett: This is a result of a quality backlog conversion, while simultaneously, reducing our costs ultimately, resulting in accretive growth.

Brett Urban: And in our corporate segment, corporate expenses for the second quarter decreased year over year as we've made further progress with our OneBrightView strategy. We continue to evaluate opportunities for centralization, which we expect to lead to further efficiency. Turning to slide 12 to discuss the unwinding of our aggregator business, as we mentioned on our previous earnings call. Our aggregator business, also known as BES, is a non-core, unprofitable subcontractor business. This business was originally set up to outsource work to local providers in markets where BrightView was unable to provide direct services. However, our ability to control and maintain service levels was limited.

Brett: And in our corporate segment corporate expenses for the second quarter decreased year over year as we made further progress with our one <unk> strategy.

Brett: We continue to evaluate opportunities for centralization, which we expect to lead to further efficiencies.

Brett: Turning to slide 12 to discuss the unwinding of our aggregator business as we mentioned on our previous earnings call.

Brett: Our aggregator business.

Brett: Known as <unk> is a non core unprofitable subcontractor business.

Brett: This business was originally set up to.

Brett: To outsource work to local providers in markets, where bright view was unable to provide direct service.

Brett: However, our ability to control and maintain service levels was limited.

Brett Urban: As a result, and aligned with our goal of one BrightView, we are in the process of unwinding the majority of the contracts within this business. We will, however, retain a few select relationships with high-quality customers where we can self-perform the majority of the work directly from our branch network. While the unwinding of this business will have an impact on revenue, it's important to note this unwind will have no impact on our EBITDA. In fact, we anticipate an annualized EBITDA margin benefit of approximately 20 basis points from this strategic decision. This action reinforces our commitment to One Bright View.

Brett: As a result and aligned with our goal of one bright view, we are in the process of unwinding. The majority of the contracts within this business.

Brett: We will however, retain a few select relationships of high quality customers, where we can self perform the majority of the work directly from our branch network.

Brett: While the unwinding of this business will have an impact on revenue. It is important to note. This unwind, we will have no impact to our EBITDA.

Brett: In fact, we anticipate an annualized EBITDA margin benefit of approximately 20 basis points from this strategic decision.

Brett: This action reinforces our commitment to one bright view enhancing customer service and improving our position as a service provider of choice.

Unknown Attendee: Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, and Chris Stoczko, Let's now turn to slide 13 to review our free cash flow, capital expenditures, and leverage. For the first half, we are extremely pleased with our free cash flow generation of $89 million compared to $16 million in the prior year. It's important to note that we are committed to reinvesting in our fleet strategy, and our capital expense reduction is purely timing-related. More to come on this on the next slide. Net leverage for the quarter came in at 2.4 times, compared to 5.0 times in the prior year period.

Brett: Let's now turn to slide 13 to review, our free cash flow capital expenditures and leverage.

Brett: For the first half we are extremely pleased with our free cash flow generation of $89 million.

Brett: Compared to $16 million in the prior year.

Brett: It's important to note we are committed to reinvesting in our fleet strategy and our capital expense reduction is purely timing related.

Brett: More to come on this on the next slide.

Brett: Net leverage for the quarter came in at two four times compared to 5.0 times in the prior year period.

Brett: This lower leverage reflects the significant reduction in our debt improved liquidity and improved profitability in the business.

Brett Urban: This lower leverage reflects a significant reduction in our debt, improved liquidity, and improved profitability in the business. Our leverage profile allows us to have financial flexibility, for the ongoing execution of our profitable growth strategy, and investment in the business. Moving to slide 14.

Brett: Our leverage profile allows us for financial flexibility for ongoing execution of our profitable growth strategy and investing in the business.

Brett: Moving to slide 14.

Brett Urban: With our enhanced profitability and strengthened balance sheet, we have the financial flexibility to invest in the business and execute our growth strategy. One of our top priorities for reinvesting in the business is upgrading our fleet and equipment. Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, Chris. We aim to rejuvenate our fleet, optimize asset life cycles, enhance our overall brand, and continue to take better care of our employees.

Brett: With our enhanced profitability and strengthened balance sheet, we have the financial flexibility to invest in the business and execute our growth strategy.

Brett: One of our top priorities for reinvesting in the business is upgrading our fleet and equipment.

Brett: To facilitate this change we recently hired two central leaders to further unlock leveraging the size and scale of the organization.

Brett: We aimed to rejuvenate our fleet.

Brett: Optimized asset life cycles enhance our overall brand and continue to take better care of our employees.

Brett Urban: This capital deployment will directly benefit our employees and customers while also yielding financial advantages by reducing future maintenance and rental costs. However, it's important to note that we do not anticipate this changing our long-term net capex outlook of approximately 3.5% of revenue, as the higher residuals will offset the gross increase in investment. Now let's turn to slide 15 to review our outlook for Fiscal 2015. As Dale previously mentioned, we are reaffirming our fiscal year 24 EBITDA midpoint and raising our margin and free cash flow guidance. Now, let's hit on some of the details.

Brett: This capital deployment will directly benefit our employees and customers, while also yielding financial advantages by reducing future maintenance and rental costs.

Brett: It's important to note that we do not anticipate this changing our long term net capex outlook of approximately three 5% of revenue as the higher residuals will offset the gross increase in investment.

Brett: Now, let's turn to slide 15 to review our outlook for fiscal 'twenty four.

Brett: As Dale previously mentioned, we are reaffirming our fiscal year, 2004, EBITDA midpoint, and raising our margin and free cash flow guidance.

Brett: Now, let's hit on some of the details.

Brett Urban: We are updating our revenue range to $2.74 to $2.8 billion to primarily reflect the BES unwind and snow coming in at the low end of our original guidance range. The updated revenue guidance assumes the following. The unwinding of BES and the previously announced sale of U.S. lawns is expected to have an approximately $70 million impact on revenue for the year.

Brett: We are updating our revenue range to $2 74 to $2 8 billion to primarily reflect the <unk> unwind and snow coming in at the low end of our original guidance range.

Brett: The updated revenue guidance assumes the following.

Brett: The unwinding of BS and the previously announced sale of U S. Lawns is expected to have an approximately $70 million impact on revenue for the year.

Brett Urban: For snow, now that the snow season is complete, we are incorporating revenue of $215 million, which is within but at the low end of our original guidance range. And for development, we are maintaining our assumption of 2% to 5% growth for the year as the conversion of our strong backlog of projects will continue to benefit revenue growth. For Core Land, we are refining this to the lower end of our original guidance range as we focus on profitable growth.

Brett: For snow now Thats no season is complete we are incorporating revenue of $215 million, which is within but at the low end of our original guidance range.

Brett: And for development, we are maintaining our assumption of 2% to 5% growth for the year as the conversion of our strong backlog of projects will continue to benefit revenue growth.

Brett: For core land, we're refining this to the lower end of our original guidance range as we focus on profitable growth.

Brett Urban: And in regards to acquisitions, we are now assuming zero versus minimal in our previous guidance as we focus on streamlining our operating structure and ensuring stability for acquisitions in the future. Moving to adjusted EBITDA, One BrightView will be the key driver to growing profit and expanding margins. Despite adjusting our revenue guidance and despite snow revenue at the low end of our original range, we are maintaining the midpoint of our EBITDA guidance, which in turn translates to raising our margin expansion expectations. We expect these improvements to now generate total margin expansion of 90 to 130 basis points, with adjusted EBITDA of $315 to $335 million.

Brett: And in regards to acquisitions, we are now assuming zero versus minimal in our previous guidance as we focus on streamlining our operating structure and ensuring stability for acquisitions in the future.

Brett: Moving to adjusted EBITDA, one bright view will be the key driver to growing profit and expanding margins.

Brett: Despite adjusting our revenue guidance and despite snow revenue at the low end of our original range. We are maintaining the midpoint of our EBITDA guidance, which in turn translates to raising our margin expansion expectations.

Brett: We expect these improvements to now generate total margin expansion of 90 to 130 basis points with adjusted EBITDA of $315 million to $335 million.

Brett Urban: We expect a continuation of healthy cash flow generation, driven by improved operating performance. Our outlook reflects our commitment to growth and investment in our core business. Contributions from reduced interest expense will be managed alongside the ongoing requirements to optimize the business.

Brett: We expect a continuation of healthy cash flow generation driven by improved operating performance.

Brett: Our outlook reflects our commitment to growth and investment in our core business.

Brett: Contributions from reduced interest expense will be managed alongside the ongoing requirements to optimize the business.

Brett Urban: Altogether, we now expect to generate free cash flow of $55 to $75 million, which is an increase over the previously provided guidance rate. Before I hand the call back over to Dale, I want to wrap up on slide 16. I want to reiterate my excitement around the investments we are making and the impact it has had on business and our culture by taking better care of our employees, who, in turn, are taking better care of our customers. I feel more optimistic than ever regarding the future of our company. With that, let me now turn the call back to Dale to wrap up on slide 17. Thank you, Brett.

Brett: Altogether, we now expect to generate free cash flow of $55 million to $75 million.

Brett: Which is an increase to the previously provided guidance range.

Speaker Change: Before I hand, the call back over to Dale I want to wrap up on slide 16.

Dale A. Asplund: I want to reiterate my excitement around the investments, we're making and the impact it has had on business and our culture.

Speaker Change: By taking better care of our employees, who in turn are taking better care of our customers I feel more optimistic than ever regarding the future of our company.

Speaker Change: With that let me now turn the call back to Dow to wrap up on slide 17.

Dale A. Asplund: Before we open the call for questions, I'd like to provide a few final thoughts. We are making considerable progress toward our goal. And we are seeing the returns on these efforts begin to materialize, and the results can gain traction across the company. I firmly believe that all the strategic changes we are making to transform this business position us to accelerate profitable growth over the long term and create value for all of our stakeholders. With that said, operator, you can now open the call for questions.

Dow: Thank you Brad before we open the call for questions I'd like to provide a few final thoughts.

Dow: We are making considerable progress on our goals and.

Dow: And we're seeing the returns on these efforts begin to materialize in the results and gained traction across the company.

Dow: I firmly believe that all the strategic changes, we are making to transform this business position us to accelerate profitable growth over the long term and create value for all of our stakeholders.

Speaker Change: With that said operator, you can now open the call for questions.

Operator: Thank you. We will now begin today's Q&A session. If you would like to ask a question today, please press star followed by one on your telephone keypad. To withdraw your question, please press star followed by two. Our first question today comes from Bob Labick from CJS Securities. Your line is now open, please go ahead.

Speaker Change: Thank you we will now begin today's Q&A session.

Speaker Change: Like to ask a question today. Please press star followed by one on your telephone keypad. Please join your question. Please press star followed by <unk>.

Speaker Change: Our first question today comes from Bob Lubbock from CJS Securities. Your line is now open. Please go ahead.

Robert James Labick: Good morning. Congratulations on a nice quarter. Thanks, Bob. So, I wanted to start off, obviously it makes sense to us, the unwind of the BES business, but for those of us with a history of BrightView and maybe prior management, can you talk about how this, Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, Chris

Robert James Labick: Good morning, congratulations on a nice quarter.

Robert James Labick: Thanks, Paul This is Bob.

Robert James Labick: Great.

Robert James Labick: So I wanted to start off obviously, it makes sense to us the unwind of the <unk> business, but for those of us with a history of.

Robert James Labick: Bright view than maybe prior management.

Robert James Labick: Can you talk about how this is different than <unk>.

Robert James Labick: <unk> management would said they are walking away from unprofitable business, but we never saw any.

Robert James Labick: <unk> and margin accretion or anything like that how do you break this out how do you how is this different than the past.

Dale A. Asplund: Yeah, that's a great question, Bob. I'll start off, and then I'll kick it over to Brett.

Speaker Change: Yes, Great question, Bob I'll start off and then I'll kick it over to Brad.

Dale A. Asplund: So first, we're doing today's call from our branch in Elmhurst, Illinois. There's no better way to start the day than to go out and spend time with our hourly employees to stretch and flex as they go to leave our branch to service our customers. That's what's key in our business, using our employees to service our customers. Unfortunately, what happened with that aggregator business is we were using our brand, our reputation for quality of service, and actually not doing the work, letting different providers all over the country use our name to actually service the customer. And when they disappointed the customer, it turned out the customer would think BrightView was the one underperforming the service.

Robert James Labick: First.

Robert James Labick: Today's call from our branch in Amherst, New York.

Robert James Labick: Still annoy and.

Speaker Change: There's no better way to start today, then we go out and spend time with our hourly employees to do stretch and flex as they go to leave our branch to service our customers.

Speaker Change: Thus was key in our business is using the all employees to service our customers.

Speaker Change: Unfortunately, when it happened with that aggregator business is where we're using our brand our reputation on.

Speaker Change: Quality of service and actually not doing the work leading different providers all over the country use our name to actually service the customer and then they disappointed the customer it turned out the customer with some bright view was the one underperforming the service so what's different about what this.

Dale A. Asplund: So what's different about this aggregator business, The choice to de-emphasize and the past is this is just unique enough that we said we don't want to be a provider of services where we can't control the end service to the customer. In the past, when the company made the decision that we wanted to walk away from unprofitable businesses, that's not our role. Our role here is to find a way to make any business we have profitable, work with our branches to drive profitability through the business. This aggregating business was completely different.

Speaker Change: <unk> business.

Speaker Change: The choice to deemphasize and the past.

Speaker Change: This is just unique enough that we said we don't want to be.

Speaker Change: A provider of service, where we can't control the end service to the customer.

Speaker Change: Past when the company made the decision that we wanted to walk away from unprofitable business.

Speaker Change: Well.

Speaker Change: Goal here is to find a way to make any business, we have profitable work with our branches to drive profitability through the business. This aggregated business was completely different it was not about us being able to do things better to service the customer it was completely about us just trying to get a small mom.

Dale A. Asplund: It was not about us being able to do things better to service the customer. It was completely about us just trying to get a small margin off the service somebody else was providing. And that would have been okay until our name, our reputation, was damaged. But I hope that gives you a high level.

Speaker Change: Jen off service somebody else was providing and that would've been okay until our name our reputation was being damage, but I hope that gives you a high level and I'll, let Brad add.

Brett Urban: And I'll let Brett add in. He can probably give you some details on what we're talking about as far as the volume of the walkaway that we're gonna do in this business. Yeah, by the way, I would just add to that. I think Dale said it well.

Brad: He can probably give you some details on what we're talking about as far as the volume up of the walkaway that we're going to do on this business. Yes, I would just I would just add to that I think that I'll say that while I would just add to that the aggregate business different from the past as you see we're adjusting our revenue guidance with the majority really being the unwinding of our aggregate.

Brett Urban: I would just add to that the aggregator business is different from the past. As you see, we're adjusting our revenue guidance with the majority really being the unwind of our aggregator business and snow at the low end of the range. Really, the two main pieces of the revenue guide change. But the big difference in the past, I think what you're seeing here is that we're reaffirming our EBITDA guidance at $325 million at the midpoint, and we're raising margin expectations.

Speaker Change: In our business and snow at the low end of our range really the two main pieces of the revenue guide change.

Speaker Change: But the big difference in the past I think what Youre seeing here is we are reaffirming our EBITDA guidance of $325 million at the midpoint and we're raising margin expectations I think.

Brett Urban: I think when you go back and play old tapes from the past, there were strategies to maybe exit accounts that didn't come with profit accretion or margin accretion. I think that's really where you're seeing the big difference here in this strategy, is that you're seeing the profit dollars, and you're seeing the margin come along with that. So we're really excited about the future of the business, what our core self-performed network of branches is going to be able to produce, and unwinding this non-core business, which has had an impact on our brand reputation in the market.

Speaker Change: Go back and play all tapes in the past there was.

Speaker Change: <unk> used to maybe exit accounts that didnt come with profit accretion our margin accretion I think thats really where youre seeing the big difference here and there.

Brett Urban: Strategy is that you are seeing the profit dollars and youre seeing the margin come along with that so we're really excited about the future of the business, while our core self perform network of branches is going to be able to produce and unwinding this noncore business, which.

Speaker Change: Impact on our brand reputation in the market is definitely the right move for the company and importantly, no really comes with very minimal to no EBITDA impact.

Brett Urban: It was definitely the right move for the company, and important to know, it really comes with very minimal impact on the company. So, but we feel great about that decision. We're really through the unwind at this point. We're able to update guidance for the rest of this year, as you can see in our new guidance issued on page 15 of the earnings deck. And really, the biggest piece of our revenue.

Speaker Change: So the company so we feel great about that decision.

Brett Urban: Really through the unwind at this point, we're able to update guidance for the rest of this year as you can see in our new guidance issued on page 15 of the earnings deck.

Brett Urban: Really the biggest piece of our revenue the change in guidance is the unwinding this aggregator business, which we'll call it about $70 million and you couple that with the sale of the U S lawns business.

Dale A. Asplund: Okay, great. That's a great explanation. I really appreciate that, and it segues well.

Speaker Change: Okay great.

Speaker Change: Great explanation really appreciate that and second was well into my next question too. Obviously, you mentioned you reiterated the midpoint of EBITDA guidance.

Dale A. Asplund: Frankly.

Dale A. Asplund: Exciting beginning of a transformation here if you hit 325 and EBITDA. This year after five years at or below 300, and I think it's a homerun.

Dale A. Asplund: So.

Dale A. Asplund: Maybe you can just kind of help.

Speaker Change: Help us think through this in the coming years in terms of the key drivers for that finally getting to EBITDA growth how much of it is.

Dale A. Asplund: Cost cuts right sizing the organization is that sooner and then how much you've talked about a lot of operational and cultural changes.

Speaker Change: When does that start driving the bottom line growth and margin accretion as well.

Dale A. Asplund: Yeah, great. A great question, Bob.

Dale A. Asplund: Yes.

Dale A. Asplund: Great.

Dale A. Asplund: Great question, Bob I think we are so proud of what will be a breakthrough year for us on the EBITDA front Youre right. This business has hovered around the $300 million level and this year at the midpoint of $3 25, It will definitely be a transformation no short term, we're getting a lot of that benefit as we lead up.

Dale A. Asplund: The organization to remove layers, so that our people can service our customers better.

Dale A. Asplund: We all can understand that long term our focus is going to be on growing this business. So we've seen some changes over the last six months, but we are going to focus on continuing to invest in our sales force. So we can actually get back on the growth engine because that is the way we will grow this business.

Dale A. Asplund: We have some headwinds.

Dale A. Asplund: The amount of revenue that we're trimming from the aggregator model, but long term, we're going to grow the bottom line by growing the top line, but doing it profitably not chasing revenue by having an organization structure, where our branch managers can work with our sales organization to target Wichita.

Dale A. Asplund: <unk> make the most sense to build out route density for our teams. So that we can service our customers at a lower cost. So long term. It we closed all of our team at our branches working together to make sure we drive profitable growth. So short term, yes cost saves will drive a lot of the.

Dale A. Asplund: Long term, it's going to come from growing together as a company and growing with the right accounts profitably.

Speaker Change: Thank you.

Dale A. Asplund: I think we are so proud of what will be a breakthrough year for us on the EBITDA front. You're right, this business has hovered around the $300 million level. And this year, at the midpoint of $325, it'll definitely be a transformation.

Dale A. Asplund: I would just say Bob we're really excited that we had a great second quarter results. When it comes to EBITDA and EBITDA margin expansion, we're not guiding quarterly anymore, but to the first half of the year. We've had great results we grew.

Dale A. Asplund: Now, in the short term, we're getting a lot of that benefit as we lean out the organization to remove layers so that our people can serve our customers better. I think we can all understand that, long term, our focus is going to be on growing this business. So we've seen some changes over the last six months, but we are going to focus on continuing to invest in our sales force so we can actually get back on the growth engine, because that is the way we will grow this business. We have some headwinds from the amount of revenue that we're trimming off from BES, the aggregator model.

Dale A. Asplund: But long term, we're going to grow the bottom line by growing the top line, but doing it profitably, not chasing revenue, by having an organizational structure where our branch managers can work with our sales organization to target which accounts make the most sense to build out route density for our team so that we can service our customers at a lower cost. So, long term, it requires all of our team and our branches working together to make sure we drive profitable growth. So, in the short term, yes, cost savings will drive a lot of the benefit. Long term, it's gonna come from growing together as a company and growing with the right accounts. Do you want to add anything?

Dale A. Asplund: EBITDA of $16 million, we grew margins over 100 basis points. So we feel great for the first six months results of this of this year, we feel like the back half of the year is set up to fiscal 'twenty for a breakthrough year for bright view and then as Dow mentioned, we get through the first half of 'twenty five as we step over the unwind.

Brett Urban: No, I would just say, you know, Bob, we're really excited. We had great second quarter results when it comes to EBITDA and EBITDA margin expansion. You know, we're not diving quarterly anymore, but for the first half of the year, we've had great results. We grew EBITDA $16 million. We grew margins over 100 basis points. So we feel great about the first six months' results of this year.

Brett Urban: We feel like the back half of the year is set up to have fiscal 24, a breakthrough year for BrightView, and then, as Dale mentioned, we get, you know, through the first half of 25, as we step over the unwind of our BES aggregator business and we step over the sale of the U.S. lawns business. We feel like we'll be off and running in the second half of next year with something profitable and creative.

Brett Urban: S aggregator business, we step over the sale of the U S bond business, we feel like we'll be off and running in the second half of next year through that profitable accretive growth.

Brett Urban: Okay.

Speaker Change: Okay Super I appreciate that I'll jump back in queue, let others ask questions. Thank you.

Brett Urban: Okay.

Timothy Michael Mulrooney: Our next question today comes from Kim Mulrooney from William Blair. Your line is now open. Please proceed.

Brett Urban: Our next question today comes from Ken <unk> from William Blair. Your line is now open. Please proceed.

Timothy Michael Mulrooney: Yeah, good morning. Thanks for taking my questions. So, two quick ones.

Timothy Michael Mulrooney: Yes. Good morning, Thanks for taking the questions. So two quick ones.

Timothy Michael Mulrooney: There is a lot of change going on. So, slides of that could really highlight it.

Timothy Michael Mulrooney: A lot of change going on.

Timothy Michael Mulrooney: No.

Timothy Michael Mulrooney: Slide six to me was the most interesting cycle that could really highlighting.

Timothy Michael Mulrooney: The operational changes that youre, making in the business. My question is on that top box the four divisions and the legacy structure that you've eliminated can you just dig into this a little bit more what was it that you eliminated.

Dale A. Asplund: My question is on that top box, the four. Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, Chris Stoczko, BrightView Holdings Inc., just dig into this a little bit more. What I'm doing differently now versus before is really helping to add value. Yeah, Tim, great, great question. The way to look at it is that traditionally, the business was operated in four divisions. Those divisions, one was our development division that was solely focused on development and new work in the landscape sector.

Dale A. Asplund: That you are doing differently now versus before that's really helping to add value to the business.

Speaker Change: Yes, Tim Greg Great question I think.

Dale A. Asplund: The way to look at it is traditionally the business was operated in four divisions. Those divisions. One was our development division that was solely focused on development of new work.

Dale A. Asplund: Landscape.

Dale A. Asplund: The other three were, one was seasonal, which is the northern climates. We had a market that was, or a division that was focused on evergreen west and evergreen east. So those were more in the non-snow climates.

Dale A. Asplund: The other three were one was seasonal.

Dale A. Asplund: As the northern climates, we had a market that was or a division that was focused on evergreen west an evergreen east. So those were more in the non snow climates.

Dale A. Asplund: The challenge, Tim, was that we were operating each one of those businesses independently. And a lot of the things that we should benefit from as a company of our size and scale weren't happening based on having those four independent divisions. In fact, we weren't even leveraging the expertise we had in our development business to migrate that into new maintenance revenue. Now, we've taken one of those resources. He's now our chief commercial officer. We've eliminated that layer.

Dale A. Asplund: Tim was we were operating each one of those businesses independently.

Dale A. Asplund: And a lot of the things that we should benefit as a company of our size and scale werent happening based on having those four independent divisions. In fact, we werent, even leveraging the expertise we have in our development business to migrate that into new maintenance revenue.

Dale A. Asplund: And we're utilizing our regional people, who now manage our branch managers from development and maintenance to work together across geographies in the country, which is creating a big improvement in our go-to-market to service our customers. Traditionally, we had silos in this business where people were trying to manage for the best of their P&L, not focused on what's best for the overall company. And by doing that, putting the customer first.

Dale A. Asplund: We've taken one of those resources. He is now our chief commercial officer, we've eliminated that layer and we're utilizing our regional people, who now manage our branch managers from development and maintenance to work together across geographies in the country, which is creating a big improve.

Dale A. Asplund: And our go to market to service our customers traditionally we had silos in this business where people would.

Dale A. Asplund: Trying to manage to the best of their P&L.

Dale A. Asplund: <unk> focused on what's best for the overall company and by doing that putting the customer first so removing that top layer really allows us to step back and say, we're going to run this as a $2 $8 billion business not as four independent businesses located across the country and we're using that.

Dale A. Asplund: So removing that top layer really allows us to step back and say, we're gonna run this as a $2.8 billion business, not as four independent businesses located across the country. And we're using that layer below it, our regional leaders that now manage both maintenance and development locations geographically as a way to get people to work better together. So, eliminating that layer has been our first step to trying to get more people closer to the customer and trying to get more people working together as one BrightView.

Dale A. Asplund: Lower below at our regional leaders that know manage both maintenance and development locations geographically as a way to get people to work better together.

Dale A. Asplund: So eliminating that layer has been our first step the trying to get more people closer to the customer and trying to get more people working together as one breakthrough.

Dale A. Asplund: That's a great question. It looks like some of the boxes below that, as well, some of these changes that you're making are all kind of along. Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, Chris Stoczko, BrightView Holdings Inc., gather whether sales and operations are being integrated into the same brand. I will stop, integrating them into the branches.

Speaker Change: A great question.

Dale A. Asplund: Okay.

Dale A. Asplund: It looks like some of the boxes below that.

Dale A. Asplund: Well some of these changes that you're making are all kind of.

Dale A. Asplund: Along that same kind of mindset getting everyone to work together whether it's.

Dale A. Asplund: Sales and operations being integrated into the same branch or take it both silo specialty businesses.

Dale A. Asplund: Integrating them into the branches is that the right way to think about a lot of these transformational organizational changes is just bringing everyone together.

Timothy Michael Mulrooney: Is that the right way to think about a lot of these transformational LLCs? Bringing everyone together under one. It's less siloed and can focus. Yeah, exactly.

Timothy Michael Mulrooney: Under one roof, so it's less siloed and didn't focus on the customer.

Timothy Michael Mulrooney: Okay.

Dale A. Asplund: And that is a great way to look at it. We have to take all the services we can provide as BrightView and allow us to provide services to our customers as a unified front. The customer has to leverage everything we do. We're a top 50 construction company with our development group. We have a wonderful tree division. We have golf course specialties. We have a turf division.

Speaker Change: Yes, exactly Tim that is a great way to look at it we have to take all of the services. We can provide is bright view it will allow us to provide services to our customers as a unified front to the customer the customer has to leverage everything we do we're a top 50 construction company with our <unk>.

Dale A. Asplund: Element group, we have a wonderful free division, we have golf course specialties, we have a turf division we have to make sure that all of our branches can leverage all of those resources to service our customers removing those silos, where people are operating independently enables us to just go to.

Dale A. Asplund: We have to make sure that all of our branches can leverage all of those resources to serve our customers. Removing those silos where people are operating independently enables us to just go to market with the customer and motivates us to grow faster by giving the customer the ability to get all the services from us. So, yeah, that's a great way to look at it. This is all about our ability for our customers to leverage everything we do better and be able to grow faster with us by working with BrightView and having one partner versus needing to rely on multiple different ones. Sounds like a lot of change but very exciting. So good luck with that. And thank you, Thanks. Thanks.

Dale A. Asplund: With the customer and motivate us to grow faster by given the customer the ability to get all the services from us. So yes, that's a great way to look at it. This is all about our ability for our customers to leverage everything we do better and be able to grow faster with us by working with <unk> and <unk>.

Dale A. Asplund: One partner versus needing to rely on multiple different companies.

Dale A. Asplund: Okay.

Dale A. Asplund: Sounds like a lot of change, but also sounds very exciting so good luck with that and thank you for taking my questions.

Speaker Change: Thanks, Tim Thanks, Tim.

Dale A. Asplund: Okay.

Timothy Michael Mulrooney: Our next question today comes from George Tong of Goldman Sachs. Your line is now open. Please go ahead.

Dale A. Asplund: Our next question today comes from George Tong from Goldman Sachs. Your line is now open. Please go ahead.

George Tong: Hi, thanks. Good morning.

George Tong: I wanted to drill in further into the core land revenue performance, so excluding any impact from the aggregator business unwind in the US lawn divestiture. The updated full year guide is for the core land business revenue to be down two to down one. Previously, it was down two to up two. Can you just revisit what are the factors that led to the core business having a bit of a slower revenue performance for the full year and where you are in your process of right sizing your portfolio of contracts and making sure all the contracts in the core land maintenance business are economical and profitable.

George Tong: Alright, thanks, good morning.

George Tong: Wanted to drill in further into the core land revenue performance. So excluding any impact from the aggregator business online in the U S lawns divestiture.

George Tong: David Our full year guide is for the core land business revenue to be.

George Tong: Down two to down one previously it was down two to up too.

George Tong: Can you just revisit what what are the factors that led to the core business, having a bit of a slower revenue performance for the full year and where you are in your process.

George Tong: Right sizing your portfolio of contracts and.

George Tong: And making sure all the contracts and the core land maintenance business.

George Tong: Economic and profitable.

Dale A. Asplund: Yeah, great. I'll start it off, George, and then I'll kick it over to Brett.

Speaker Change: Yes, Greg ill start it off George and then I'll kick it over to Brett.

Brett Urban: So we.

Dale A. Asplund: So obviously, the biggest adjustment to our revenue that we put in our guidance was from the aggregator business. And there is a slight adjustment that's coming from our core business. That comes from two factors.

Brett Urban: Obviously, the biggest adjustment to our revenue that we put in our guidance was from the aggregator business and there is a slight adjustment that's coming from our core business that comes from two factors first as a adjustment and the ancillary revenue and some of that is from last year's hurricane benefit that we have.

Dale A. Asplund: The first is an adjustment in ancillary revenue, and some of that is from last year's hurricane benefit that we had for the first two quarters. And the second is, as we continue to work through our core customer base, to make sure we're doing everything we can to provide levels of service that they're happy with. Unfortunately, when you look at the business today, our levels of retention are below where they were when the company went public. So our goal is to find a way to try to get that retention level back up to those levels. We are not trying to eliminate customers. That's not our goal.

Dale A. Asplund: Through the first two quarters and the second is as we continue to work through our core customer base to make sure. We're doing everything we can to provide levels of service that they're happy with <unk>.

Dale A. Asplund: Unfortunately, when you look at the business today, our levels of retention are below where they were when the company went public. So our goal is to find a way to try to get that retention level back up to those levels. We are not trying to eliminate customers. That's not our goal our goal is to.

Dale A. Asplund: Our goal is to increase the service levels that we have for customers and find a way to serve them better. We are not trying to walk away from business. We made a strategic decision on the aggregator business based on our brand and reputation.

Dale A. Asplund: Increase the service levels that we have for customers and find a way to service them better we are not trying to walk away from business. We made a strategic decision on the aggregator business based on our brand and reputation but our goal is to find a way to service every customer we have today and find it.

Dale A. Asplund: But our goal is to find a way to service every customer we have today and find a way to get growing back again in 2025. So we're working hard, and we've got to get our teams focused on putting that customer first because that's our next step to making sure we can grow this business on both the top line and the bottom line as we go into 2020. Yeah, George, I would just add some clarity to the change in the guide, you know, at the midpoint of our previous guide, which, you know, we really came out with at the end of Q4, and we discussed the unwinding potential of our aggregator business.

Dale A. Asplund: Way to get growing back again in 2025.

Dale A. Asplund: So we're working hard and we've got to get our teams focused on putting that customer first because that's our next step to making sure. We can grow this business on both the top line and the bottom line as we go into 'twenty five.

Speaker Change: Yes, George I would just add just firm up for <unk>.

Dale A. Asplund: Clarity.

Dale A. Asplund: And the change in the guide at the midpoint of our previous guide, which we really came out with at the end of Q4, and we discussed the unwinding potential of our aggregator business keep in mind, we are in the middle of our snow season for the aggregator business. So we didn't want to disrupt any current customers. We said to give an update on this call, but if you think about the midpoint of our guide.

Dale A. Asplund: Keep in mind, we were in the middle of our snow season for the aggregator business, so we didn't want to disrupt any current customers, and we said we'd give an update on this call. But if you think about the midpoint of our guide at $2.9 billion when we first came out this year, which is the adjusted midpoint now of $2.770 billion, it's about $130 million adjusted. $70 million of that is that aggregator business, U.S. law, and sale, which is the biggest portion of the guy that, $25 million of it is simply snow, the midpoint of $240, snow coming in at $215. That's another $25 million.

Dale A. Asplund: $2 9 billion. When we first came out this year can be adjusted midpoint now 277 zero billion its about $130 million adjustment to $70 million of that is that aggregate our business U S. Lawn sale, which is the biggest portion of the guide adjustment.

Dale A. Asplund: <unk> $25 million of it is simply snow midpoint of $2 40, or so coming in at $2 15, that's another $25 million.

Brett Urban: And in the previous guide, we had minimal M&A. Now we're saying for the rest of this year, we'll have no M&A. So call that another $10 to $15 million. So out of the $130 million revenue adjustment at the midpoint, $110 million of those three, which really leaves you with eight to ten million additional per quarter for that core land. And I think Tim asked the last question from William Blair about the operating structure.

Dale A. Asplund: And the previous guide we had minimal M&A now, we're saying for the rest of this year, we will have no M&A so call that another $10 million to $15 million. So out of the $130 million revenue adjustment at the midpoint $110 million of those three factors, which really leaves you with call. It eight to 10 additional per quarter for that core land.

Brett Urban: And I think Tim asked the question last from William Blair about the operating structure and I think that correlates to where we are in our journey II.

Brett Urban: I think that correlates to where we are in our journey back to sustainable, profitable growth. We said on previous calls that this organization, on a quarterly basis, was growing at the sake of really anything to grow. And that's not the way we're positioning this company moving forward. We've realigned our sales force into our branches.

Brett Urban: To sustainable profitable growth.

Brett Urban: We said on previous calls that this organization on a quarterly basis was was growing at at the sake of really anything to grow and thats not the way we are positioning this company moving forward.

Brett Urban: We've realigned our sales force into our branches, we've set up our operating structure now where our leaders and our geographical markets are both managing maintenance and development and you think about the long term potential of those things that we've done I mean, it's just so significant and we're in the early journey of this of this change right. We just didnt.

Brett Urban: We've set up our operating structure now where our leaders in our geographical markets are both managing maintenance and development. And you think about the long-term potential of those things that we've done. I mean, it's just so significant.

Brett Urban: And we're in the early journey of this change. Right. We just announced the operating structure, which is about 90 days old. Right. So that's going to take a little bit of time to gain traction. So that's really the difference between the back half of the land core guide. It's not that we see anything systemic in the business. We actually see quite the opposite.

Brett Urban: Helps the operating structure, which is about 90 days old right. So that's going to take a little bit of time to gain traction. So that's really the difference between the back half of the land core guide.

Brett Urban: Not that we see anything systemic in the business, we actually see quite the opposite we see strong ancillary demand in the back half of this year, we see big opportunities in our contract business, we see even bigger opportunities George when it comes across selling development into maintenance, which is really an untapped potential today. So as you think about the guide.

Brett Urban: We see strong ancillary demand in the back half of this year. We also see big opportunities in our contract business. We see even bigger opportunities, George, when it comes to cross-selling development into maintenance, which is really an untapped potential today. So if you think about the guy changes, but the majority was not tied to this core land piece. And as you think about the future for this company, as we get through the first half of next year and step over some of this BES unwind and U.S. lawn sale, you step over that and get to the second half of next year. That's really when this operating structure will have a year under its belt. And we expect big things from land and organic growth from that point forward.

George Tong: Got it. That's very helpful.

George Tong: Changes like the majority was not tied to this core land piece.

George Tong: And as you're thinking about the future for this company as we get through the first half of next year and step over some of this.

George Tong: Unwind.

George Tong: In U S lawn sale, you slip over that and get to the second half of next year. That's really when this operating structure will have a year under its belt and we expect big things from our land organic growth from that point forward.

Dale A. Asplund: And then sticking with the core land business, and as you look forward to next year and the second half of this year, low single-digit declines in the core side, but next year, presumably, that swings to growth. Can you talk about expectations of how that plays out from a cadence perspective next year? And then perhaps structurally in the marketplace, how easy is it to grow profitably? In order to do so, how easy is it to compete on price or to win contracts that have good economics in a relatively competitive environment? So, let me start at a high level, George.

Speaker Change: Got it that's very helpful. And then sticking with the core land business and as you look forward to next year in the second half of this year low single digit.

Dale A. Asplund: Declines in the core side, but next year, presumably that swings to growth can you talk about expectations of how that plays out from a cadence perspective next year and then.

Dale A. Asplund: Perhaps structurally in the marketplace, how easy is it to grow profitably in order to how easy is it to.

Dale A. Asplund: Compete on price or too.

Dale A. Asplund: Wind contracts that have good economics.

Dale A. Asplund: In a relatively competitive environment.

Dale A. Asplund: So let me start at a high level, George. So we're not going to give guidance for next year. We'll do that come the end of the year. I think we'll get some headwinds in the first and second quarter, call it $10 million from the BES business. And here's what I can tell you.

Dale A. Asplund: So let me start at a high level George So we're not going to give guidance for next year, we will do that come the end of the year I think we will get some headwinds the first and second quarter call it $10 million from the <unk> business.

Dale A. Asplund: Here's what I can tell you.

Dale A. Asplund: We don't lose business because of it. That's the most optimistic thing I can tell you. Unfortunately, where we fall down and the customer decides to leave us, it's usually because of a lack of communication or quality of service. Those are two things I can make sure the team fixes, and that's what I'm committed to. And those eight geographic leaders are focused.

Dale A. Asplund: We don't lose business because of price.

Dale A. Asplund: It's the most optimistic thing I can tell you, Unfortunately, where we fall down and the customer decides to leave us.

Dale A. Asplund: Usually because of lack of communication or quality of service. Those are two things I can make sure the team fixes and Thats, what I am committed to in those eight geographic leaders are focused on we can control that better communication with our customers and making sure those people that leave the gates every morning.

Dale A. Asplund: We can control that; better communication with our customers and making sure those people that leave the gates every morning are focused on servicing the customer. That's the way we're going to return to growth. We can't try to outrun customers that decide to leave us because we're not taking care of them. Our path to profitable growth starts with retaining more of our business. And that's where we're going to focus. Now, we've seen a minor improvement in that, but nowhere near the levels that we need.

Dale A. Asplund: Focused on servicing the customer.

Dale A. Asplund: That's the way, we're going to return to growth, we can't try to outrun customers that decided to leave us because we're not taking care of them.

Dale A. Asplund: Our path to profitable growth starts with retaining more of our business and that's where we're going to focus now we've seen a minor improvement in that but nowhere near the levels that we need to be when I travel with them of the branches.

Dale A. Asplund: When I travel, when I'm out in the branches, and I'm at a branch that has 90 to 95% retention, they are growing, and they are growing profit. And when I go to a branch whose retention is far below that, they are not growing. They're struggling just to keep up with new accounts. So it's a simple business when you think about taking care of the customers you have and then finding new customers that fill in the existing routes that you have that you can service and make it more profitable.

Dale A. Asplund: At a branch that has 90% 95% retention they are growing and they are growing profitably and when I go to a branch whose retention as far below that they are in that rollout. There are struggling just to keep up with new accounts.

Dale A. Asplund: So it's a simple business when you think about take care of the customers you have and then find new customers. They fill in the existing routes that you have that you can service and make it more profitable.

Dale A. Asplund: So this isn't something that we need to worry about; we've got to get a price benefit, or we can't get a price on this. We've got to figure out a way to take care of our existing customers and communicate a lot better to them, and listen when they have an issue. So that's our future, higher retention and continuing to focus on new sales.

Dale A. Asplund: So this isn't something that we need to worry about we've got to get price benefit or we can't get price on this we've got to figure out a way to take care of our existing customers and communicate a lot better to them and listen when they have an issue.

Dale A. Asplund: So that's our future higher retention and continue to focus on new sales.

Dale A. Asplund: Yes.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thanks George.

Greg Palm: The first question today comes from Greg Palm from Craig Hallam Capital Group. Your line is now open.

Dale A. Asplund: And today comes from Greg Palm from Craig Hallum Capital Group. Your line is now open. Please proceed.

Greg Palm: Yeah, good morning. Thanks for taking the questions here. Appreciate all the info in the deck. I wanted to also touch on one of the slides, you know, page 14 on this kind of CapEx plan. So, you know, net CapEx over the coming years doesn't change a whole lot, but you're reinvesting a lot of money into the fleet. So, you know, I think you mentioned, but presumably, you're going to save a lot of money on, you know, maintenance, and rental costs. It seems like an all-in-one solution.

Greg Palm: Yes, good morning.

Greg Palm: Thanks for taking our questions here I appreciate all the info in the deck I wanted to also touch on one of the slides page 14.

Greg Palm: On this kind of Capex plans, so net capex over the coming years doesn't change a whole lot, but you're reinvesting a lot of money into the fleet. So I think you mentioned, but presumably you're going to save a lot of money on maintenance rental costs seems like a no brainer can you can you quantify it.

Greg Palm: Can you quantify it for us? Can you give us, you know, some color on what you hope to save in the coming years? And, you know, I guess, is there a sort of timeline when things really start to ramp up?

Greg Palm: For us can you give us some color on what you hope to save in the coming years.

Greg Palm: Is there a.

Greg Palm: Sort of a timeline when things really start to ramp up.

Dale A. Asplund: Yeah, great, great question, Greg. So first, let me tell you this morning that I think the way Brett finished off his section was very fitting.

Speaker Change: Yes, great Great question Gregg so.

Speaker Change: First let me tell it this morning.

Speaker Change: I think the way Brett.

Speaker Change: <unk> finished off his section was very fitting booths, new mowers, new trucks happy employees happy employees happy customers.

Dale A. Asplund: Boots, new mowers, new trucks, happy employees, happy customers. This morning when I was at the gate watching the trucks roll out with the crews, you could see the smile on the guys' faces when they had a new mower and new trucks. So I think that is a byproduct.

Dale A. Asplund: And then there's the benefit of the cost savings that we're going to see. We can't have mowers that are four and five years old that we're trying to maintain to keep things going. This is equipment that our people depend on to service our customers. We're going to keep our mowers for two years, and then we're going to remove them from service and sell them. As a byproduct, you're right today, we're spending far too much on maintenance for both our two-cycle equipment, our mowers, and the trucks that we're servicing. Let alone, we also have the image when we go out to a customer site, and our equipment isn't the newest out there. We want people that work for BrightView to see that as a privilege to work here, not as just a job.

Dale A. Asplund: This morning, when I was at the gate watching the trucks rollout with the growth you could see the smile on the geis faces when they had the new mower in new trucks. So I think that is a byproduct and then there is the benefit of the cost savings that we're going to see we can't have mowers that are four and five years old that were.

Dale A. Asplund: Trying to maintain to keep things going this is equipment that our people depend on to service our customers, we're going to keep our mowers two years and then we're going to remove them out of service and sell them as a byproduct you're right today, we're spending far too much I made sense for both our two cyclic.

Dale A. Asplund: Shipment, our mowers and the trucks that we're servicing let alone.

Dale A. Asplund: We also had the image when we go out to a customer site and our equipment isn't the newest out there we.

Dale A. Asplund: People that work for bright view to see that as a privilege to work here that is just the job. If you want to talk about qualitative we spent far too much our rental last year and by sharing our fleet across this company. We think there's significant opportunity to improve that last year, we spent <unk>.

Dale A. Asplund: If you want to talk about quality, we spent far too much on rental last year, and by sharing our fleet across this company, we think there's a significant opportunity to improve that. Last year, we spent probably around $15 million on rental, which we can get better at. Probably not eliminate all of it, but we can get better. Last year, we also spent a significant amount on maintenance, which we'll always have to do, preventive maintenance on fleets, but it was a much bigger number than we should have because of the age of our fleet.

Dale A. Asplund: $15 million on Reno that we can get better at probably now eliminate all of it but we can get better last year. We also spent a significant amount of maintenance, which will always have to do preventive maintenance on fleet, but it was a much bigger number than we should have because of the age of our fleet. So last year I think we spent around 40.

Dale A. Asplund: So last year, I think we spent around $40 million on maintenance. So maybe we can get rid of half that over time. It's not all going to come overnight. We've got to take the fleet we have that's far past its useful life and get it to a much healthier age. But I'll tell you, the transformation I've seen with Brett and his team finding creative ways to transition from our old days of buying equipment and keeping it for as long as humanly possible, and then disposing of it for nothing, to the strategy that Brett talked about, has been remarkable. And the two leaders we brought in to help us focus on procurement and fleet management are going to help us drive this strategy.

Dale A. Asplund: On maintenance, so maybe we can get rid of half of that over time, it's not all going to come overnight. We've got to take the fleet. We had this far past its useful life and get it to a much healthier age, but I'll tell you the transformation I've seen with Brent and his team finding creative ways to transition from our old.

Dale A. Asplund: Days of buying equipment, and keeping that as long as humanly possible and then disposing of it for nothing to the strategy that Brett talked about has been remarkable and the two leaders we brought in to help us focus on procurement and fleet management are going to help us drive this strategy.

Brett Urban: These benefits won't necessarily come in 2024 and 2025, but I can assure you if we execute this strategy over the next three to five years, we will see benefits as we get three, four, five years out. These benefits will start ticking through the P&L on both the maintenance and on the lack of rental needs and on our employee satisfaction. No, I would just add that, given the financial flexibility we have on our balance sheet right now, we're in such a good position to reinvest back into our employees and reinvest back into our people, which will, in turn, take care of our customers, right?

Dale A. Asplund: These benefits won't necessarily come in 2024, and 2025, but I can assure you if we execute this strategy over the next three to five years, we will see benefit as we get 345 years out that will start ticking through the P&L on both the maintenance.

Brett Urban: And on the lack of rental needs and our employee satisfaction.

Brett Urban: Brett do you want to add anything no I would just add that.

Brett Urban: Given the financial flexibility, we have on our balance sheet right. Now we are in such a good position to reinvest back into our employees and reinvest back into our our people, which will in turn take care of our customers right. I think I did wrap up with new boots, new trucks, New Bowers and Thats really you spend time with the brands like we are today Youll see folks drive out in a brand new <unk>.

Brett Urban: I think I wrapped it up with, you know, new boots, new trucks, new mowers. And that's really, you know, when you spend time at the branch like we are today, you see folks drive out in a brand new truck with brand new mowers on the back, with new safety shoes on.

Brett Urban: Rock with brand new mowers on the back with new safety shoes on I mean, it's a culture change that is happening in the company is hard to quantify but it will have a quantifiable impact on the P&L at some point in time and the way our balance sheet is in cash flow generation, we're going to invest almost double the amount of Capex, we did last year and still.

Brett Urban: The culture change that is happening in the company is hard to quantify, but it will have a quantifiable impact on the P&L at some point in time. And then, with where our balance sheet is and cash flow generation, we're going to invest, you know, almost double the amount of CapEx we did last year and still generate $55 to $75 million of free cash flow, which is an increase to our previously provided range.

Brett Urban: Generate 55% to $75 million of free cash flow, which is an increase of our previously provided range, we feel great about our ability given our balance sheet to execute this strategy and to offset it it won't all happen in fiscal 'twenty for fiscal 'twenty five right now we're getting about eight to 10 cents residual on equipment, we sell.

Brett Urban: We feel great about our ability, given our balance sheet, to execute this strategy. And Dale said it, it won't all happen in fiscal 24 or fiscal 25. Right now, we're getting about $0.08 to $0.10 residual on equipment we sell. That number should be far greater as we get into the future, as the chart kind of illustrates on page 5.

Brett Urban: That number should be far greater as we get into the future as the chart illustrates on page 14.

Greg Palm: Yeah, that's an interesting color and makes a lot of sense. I guess that kind of ties in with my next question. I mean, so you're getting a nice margin boost this year with the unwind of BES, and you'll have maybe a little bit of benefit next year. But, you know, how do you think about continued, you know, outsize margin improvements outside of that? Like, what are the levers? And maybe this, you know, saving on maintenance rental costs is probably part of it. But what are the levers to, you know, increasing that margin, whether it's 100 basis points annually or something different?

Brett Urban: Yes.

Speaker Change: Interesting color and makes a lot of sense.

Greg Palm: I guess that kind of ties in with my My next question I mean, so you're getting a nice margin boost.

Greg Palm: This year with the unwind of yes, youll have maybe a little bit of benefit next year, but how do you think about continued outsized margin improvements outside.

Greg Palm: Of that like what are the levers and maybe this saving on maintenance rental cost is probably part of it but what are the levers to increasing that margin, whether it's a 100 basis points annually or something different but getting back to that close to 13% EBITDA margin at the company achieved in prior years and hopefully eventually.

Greg Palm: Getting somewhere past that.

Dale A. Asplund: Yeah, great. So Greg, one way to think about it is the BES Unwind is going to have about a 20 basis points improvement on our margin. So we are gonna improve margins on our business this year by, like you said, roughly 100 basis points. If you look at the midpoint of our guide right now, it's at 11.7% EBITDA margin this year. That's 110 basis points improved.

Speaker Change: Yeah, Greg So Greg one way to think about it is the Bds unwind is going to have about a 20 basis points improvement on our margin.

Dale A. Asplund: So we are going to improve margins on our business. This year by like you said roughly 100 basis points. If you look at the midpoint of our guide right now.

Dale A. Asplund: At 11, 7%.

Dale A. Asplund: EBITDA margin this year, that's 110 basis point improvement.

Dale A. Asplund: We still have a significant opportunity to continue to centralize. We're working on different functions that have to leverage the size and scale of our business. Like procurement, we have to find a way to leverage all the spend that we have to better buy stuff across the whole organization. And when we answered Tim's question about the four unique divisions we had, unfortunately, you can guess, they were all buying somewhat independently.

Dale A. Asplund: We have still have significant opportunity to continue to centralized we are working on different functions that have to leverage the size and scale of our building of our business like procurement, we have to find a way to leverage all of the spend that we have a better buy it across the whole organization and.

Dale A. Asplund: When we when we answer Tim's question about the four unique divisions. We had unfortunately, you can guess they were all buying somewhat independently, we werent doing enough centrally we have so much opportunity to continue the centralized so we can leverage the size and the scale of the business I like what you are going with I would like to.

Dale A. Asplund: We weren't doing enough centrally. We have so much opportunity to continue to centralize so we can leverage the size and the scale of the business. I like what you're going with. I like the 100 basis point thought. I remind Brett of that number every year that that should be our goal, and I firmly believe there is no reason, with our size, that we should not run this business in a normal market with mid-teen EBITDA margins.

Dale A. Asplund: 100 basis points that I remain bread or that number every year that that should be our goal and I firmly believe there is no reason with our size that we should not run this business in a normal market with mid teen EBITDA margins. So yes last year's 10, six was far below what it is.

Dale A. Asplund: So yes, last year's 10-6 was far below what it should have been. Many reasons that got us there, but you've seen the actions we've started taking today to lean out the organization. And we're going to continue to find ways to reduce costs so we can drive for that annual market improvement. Brett, do you want to add anything?

Brett Urban: Many reasons that got us there, but you've seen the actions we've started taken today to lean out the organization and we're going to continue to find ways to reduce cost. So we can drive for that annual margin improvement like Youre thinking.

Brett Urban: Brent Q&A.

Brett Urban: No, I would just reiterate, you know, a great first half of the year, Greg, as you can see from our margin improvement, we're well over, we're over 100 basis points in the first half. We're guiding to basically a similar number in the second half, another 100 basis points in the second half between both quarters. And, you know, look, as Dale mentioned it, as we've talked a few times, we, The change we've undergone over the last seven months, there's more change to come, more positive.

Brett Urban: I would just I would just reiterate great first half of the year, Greg as you can see from our margin improvement were below where over 100 basis points in the first half we're guiding to basically a similar number in the second half of the 100 basis points in the second half between both quarters and look as Dow mentioned and as we've talked to a few times we.

Brett Urban: The change we've undergone over the last seven months, there's more change the time, where positive change to come and we're at the early innings of that change and the impact is going to have in the organization. As you think about next year do you think about the following year.

Brett Urban: And we're at the early innings of that change and the impact it's going to have on the organization. So as you think about next year and the following year, yeah, there's definitely more margin, I would say, to be had as you think about getting back to that IPO level, which is called the 12.5% range. This year, we're essentially halfway back. We'd be at 11, you know, 11.5 to 11.9 at our guidance range.

Brett Urban: Really more margin I would say to be had as you think about getting back to that IPO levels, which is called the 12, 5% range. This year, where essentially halfway back we'd be at 11 11, five to $11 nine at our guidance range and then as Dow mentioned that kind of 100 basis points of year goal would get us back next year.

Brett Urban: And then, as Dale mentioned, that kind of 100 basis points a year goal would get us back next year to that IPO level of about 12.5, 12.8 in that range. So again, we're not providing guidance for next year specifically for 2025, but we feel really good about the margin.

Brett Urban: To that IPO level about 12, $512 eight somewhere in that range. So again, we're not providing guidance for next year, specifically for 25, but we feel really good about the margin expansion opportunity, especially when we get that.

Brett Urban: Favorable growth engine going in the back half of next year and we start this development conversions and the maintenance projects. That's untapped opportunity. We have today that will just drive accretive margins in the business.

Greg Palm: All right, I will leave it there. Best of luck. Thanks.

Speaker Change: Alright, I will leave it there best of luck. Thanks.

Speaker Change: Hey, Thanks, Eric.

Stephanie Moore: As a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad. To withdraw your question, please press star followed by two. Our next question comes from Stephanie Moore from Jeffreys. Your line is now open; please go ahead.

Greg Palm: As a reminder, if you would like to ask a question on todays call. Please press star followed by one on your telephone keypad to withdraw your question. Please press star followed by <unk>.

Stephanie Moore: Our next question comes from Stephanie <unk> from Jefferies. Your line is now open. Please go ahead.

Hans Hoffman: Hi, this is Hans Hoffman on for Stephanie Moore. You know, I just wanted to touch on some sort of M&A. Obviously, you know, you guys removed it from the guide, but you know, just given that net leverage is in a much healthier position today. I'm just curious when you think that sort of comes back into the picture. And, you know, as you sort of evaluate acquisition targets, I know the strategy has changed a bit versus prior years. So I'm just kind of curious, you know, what are you guys looking for in an acquisition?

Stephanie Moore: Hi, This is Hans Hoffman on for Stephanie anymore.

Hans Hoffman: Just wanted to touch a bit on sort of M&A. Obviously, you guys removed it from the guide, but just given net leverage is in a much healthier position today I'm. Just curious when you think that's where it comes back into the picture.

Hans Hoffman: As you sort of evaluate acquisition targets I'd now like the strategy has changed a bit versus prior years. So I'm just kind of curious what are you guys looking for in acquisitions.

Hans Hoffman: Okay.

Dale A. Asplund: Yeah, look, good question. Obviously, we're in a much better financial position so if we wanted to deploy our precious capital that way, we could. But I think, as you can see on slide six of the deck, we've had significant operational changes in our organization. I want to make sure we absorb all those changes and get our teams working together cohesively, so that when we bring an acquisition in, we can be a better owner of that. I don't think that's a long period away, but it's probably not going to occur over the next two quarters. But I firmly believe a creative M&A is a way for us to grow this business, but we have to be a better owners.

Speaker Change: Yes look.

Speaker Change: Good question, obviously, we're in a much better financial position that if we wanted to deploy our precious capital that way, we could but I think as you can see on slide six of the deck. We've had significant operational changes in our organization I want to make sure we absorb all those changes.

Dale A. Asplund: Get our teams working together cohesively, so that when we bring an acquisition in we can be a better owner of that acquisition I don't think thats.

Dale A. Asplund: Long periods away, but it's probably not going to occur over the next two quarters.

Dale A. Asplund: I firmly believe accretive M&A as a way for us to grow this business, but we have to be a better owner, we have to make sure. When we bring an asset in we can help it grow faster and operate more efficiently than what it does today.

Dale A. Asplund: We have to make sure when we bring an asset in, we can help it grow faster and operate more efficiently than what it does today. That capital that we choose to deploy through M&A is precious. And we've talked about all the investments we're making with trucks, with mowers, and with boots for our employees. Those are all things that are creating a cultural shift within this company. So if we're going to bring somebody in, they've got to match our culture.

Dale A. Asplund: That capital that we choose to deploy through M&A is precious and we've talked about all the investments, we're making with trucks with mowers with.

Dale A. Asplund: Booths for our employees those are all things that are creating a cultural shift in this company. So if we're going to bring somebody in they've got to match our culture, they've got to want to be here and we've got to be willing to invest in that business and then by leveraging all of the services, we've talked about turf irrigation tree hopefully when we bring their.

Dale A. Asplund: They've got to want to be here, and we've got to be willing to invest in that business. And then, by leveraging all the services we've talked about, turf, irrigation, trees, hopefully, when we bring their customers in, we can be a better owner and help them grow faster. So I will tell you, we will be targeting M&A in 2025, just because we said we paused it for this year, but we've gone through tremendous change. I mentioned to somebody, 70% of our employees have a new boss right now. And that's a chain. And Some of the people didn't know their new boss.

Dale A. Asplund: <unk>, we can be a better owner and help them grow faster. So I will tell you we will be targeting M&A in 2025, just because we said we positive for this year, but we've gone through tremendous changed I mentioned to somebody 70% of our employees have a new boss right now and that's a change.

Dale A. Asplund: And some of the people didn't know their new boss, so let us absorb that let us get our feet under us and we will do M&A.

Dale A. Asplund: So let us absorb that. Let us get our feet under us, and we'll do M&A. I'm a firm believer in M&A. When it's done right, it can create great value. When it's done wrong, it's wasted capital.

Dale A. Asplund: Believer in M&A when its done right. It can create great value when it's done wrong, it's wasted capital.

Dale A. Asplund: So we're going to do it, and we're going to do it right. We have a big pipeline. Where I'm going to focus, I'm going to have to figure out how to do it, is I'm going to focus on our core maintenance contract. Unknown Attendee, Keen Tong, Samuel Kusswurm, Brett Urban, Faten Freiha, Dale Asplund, Chris Stoczko, BrightView Holdings Inc. I'm glad when we get snow. I'm glad when our employees can serve as customers with snow.

Dale A. Asplund: So we're going to do it and we're going to do it right. We have a big pipeline, where I'm going to focus M&A is im going to focus it on our core maintenance contract business.

Dale A. Asplund: No business as we've all seen its very unpredictable.

Dale A. Asplund: But where I'm going to put our energy for future M&A is going to be focused on the maintenance contract business across North America. And we have a lot of states today that we're not into. So if I can find M&A in new states that I can help our teams grow into and then accelerate growth, that's a great opportunity for us. So yeah, probably not, like we said, zero M&A in the back half of the year.

Dale A. Asplund: Glad when we get snow Im glad were not employees and service customers with snow, but where I'm going to put our energy for future M&A is going to be focused on the maintenance contract business across North America, and we have a lot of states today, we're not into so if I can find M&A in new states that I can help.

Dale A. Asplund: Our teams grow into and then accelerate growth that is a great opportunity for us. So yes, probably that like we said zero M&A in the back half of the year, but in 2025. When we give you guys guide we will give you an update of what we're thinking about with a high level on M&A.

Dale A. Asplund: Okay.

Hans Hoffman: Got it. That's helpful. Um, and then just kind of curious about the, you know, cross development into maintenance. Is there any particular reason, you know, that

Speaker Change: Got it that's helpful. And then just kind of curious on the <unk>.

Hans Hoffman: Cross sell of development.

Hans Hoffman: Is there any.

Hans Hoffman: The reason that that opportunity wasn't pursued in prior years, and then just sort of any thoughts around your initiatives.

Hans Hoffman: Retention back to where you were pre IPO, if you could just sort of unpack that a bit more.

Dale A. Asplund: Yeah, let's start with the development to maintenance. Look, I think, you know, like anything, when the compensation system motivates people to do what's right for themselves and convert development into maintenance, there's always some warranty work that we have to do. And, you know, it's easier not to worry about who's going to pay for the warranty if it's not going from left pocket to right pocket. So I think by putting it under one person that now owns it, they will be able to negotiate who's going to pay the warranty better than having two independent people that were worried about two different P&Ls.

Speaker Change: Yes, let's let's start with the development of maintenance look I think.

Dale A. Asplund: Like anything when the compensation system motivates people to do what's right for themselves.

Dale A. Asplund: In converting development into maintenance.

Dale A. Asplund: Some warranty work that we have to do.

Dale A. Asplund: Its easier not to worry about who's going to pay for the warranty if it's not going from left pocket right pocket. So I think by putting it under one person that now owns it they will be able to negotiate that who's going to pay the warranty better than having two independent people that we're worried about two different P&L. So this is all <unk>.

Dale A. Asplund: So this is all upside, you heard me say, it's an untapped opportunity. The developers are different than the people that are going to have the ongoing business. But that doesn't mean we should be getting the level of conversion we have in the past; we should be able to get 70 ish percent of the business that we create every year with our great development team in the new maintenance to be serviced by our So, I think it's, unfortunately, it was the structure that we had that created that. But that's work that we can do in the future. And what was the second part of your question?

Dale A. Asplund: Upside you heard me say, it's untapped opportunity the developers are different than the people that are going to have the ongoing business, but that doesn't mean, we should be getting the level of conversion. We have in the past, we should be able to get 70% of the business that we create every year with our great development team.

Dale A. Asplund: In the new maintenance to be serviced by our teams.

Dale A. Asplund: So I think it's unfortunately it was the structure that we had that created that but that's that's work that we can do in the future and what was the second part of your question.

Dale A. Asplund: Retention, customer retention, so, yeah. Yeah, so customer retention, but it's near and dear to my heart. It pains me when I hear people think that our focus is not to service our customers, like we don't want to have the customers we have today. There is no customer that costs less to acquire than the one we already have today. It is our job to find a way to service those customers and make sure they're getting the value for what they're paying. Let us do that. We can't just throw our challenges at our customers all. Our retention today is below where it was five years ago. I am going to improve that.

Dale A. Asplund: Retention customer retention so yes.

Dale A. Asplund: Yeah, so customer retention.

Dale A. Asplund: It's near and Dear to my heart and payments to me when I hear people think that our focus is to not to service our customers like we don't want to have the customers. We have today there is no customer that costs less to acquire the one we already have today.

Dale A. Asplund: It is our job to find a way to service those customers and make sure they're getting the value for what they are paying for it.

Dale A. Asplund: Let us do that we can't just throw our challenges on our customers all the time.

Dale A. Asplund: Our retention today is below where it was five years ago.

Dale A. Asplund: I am creating a culture where those people that leave our gates in the morning to go out and service the customers, they're the ones that can make the change. Every positive letter I get from a customer, they talk about the crew that's doing the work at their facility. Those crews are critical to customer retention. And then communicate, communicate, communicate.

Dale A. Asplund: I am going to improve that I am creating a culture, where those people that leave our gates in the morning to go out and service. The customers. There are the ones that can make the change every positive letter I get from our customer base.

Dale A. Asplund: Talk about the crew that's doing the work at their facility those crews are critical and customer retention.

Dale A. Asplund: And then communicate communicate communicate we can't let our customers ever be surprised.

Dale A. Asplund: We can't let our customers ever be surprised. You heard me mention we have an AI tool now, where last year when we ran the AI tool over our customers that left us, 87% of them were predicted that they were going to leave. If I can get that information into my branch manager's hands, they can go out and sit down and try to prevent those customers from leaving. We have everything we need to solve our own problems with retention. And it is in this way that the more we retain, the faster we can grow this business. Our customers are valuable. They pay our bills.

Dale A. Asplund: You heard me mentioned, we have an AI tool now where last year. When we ran the AI tool over our customers that left US 87% of them were predicted that they were going to leave us.

Dale A. Asplund: I can get that information into my branch managers hands. They can go out and sit down and try to prevent those customers leave it we have everything we need to solve our own problems on retention and it is a way that the more we retain the faster we can grow this business.

Dale A. Asplund: They have to be the center of every single thing we do. And that's our focus. And that's what we're going to focus on this year at 25. And until I get every branch someday at that 95% that I go to my best branches and see, I'll never be happy. Because when I see a fully engaged branch manager, and he has that level of retention, I know the power that this business can have.

Dale A. Asplund: Our customers are valuable they pay our bills.

Dale A. Asplund: Has to be the center of every single thing, we do and that's our focus and that's what we're going to focus on this year and 25% and until I get every branch someday at that 95% that I go to my best branches and see I'll never be happy because when I see a fully engage branch manager and he has that level of returns.

Dale A. Asplund: And I know the power that this business can have.

Speaker Change: But great question.

Dale A. Asplund: Okay.

Speaker Change: Got it thanks.

Dale A. Asplund: Yeah.

Speaker Change: You bet.

Speaker Change: Got it.

Operator: That concludes the Q&A portion of today's call. I'll now hand back over to Dale Asplund for closing remarks.

Dale A. Asplund: That concludes the Q&A portion of today's call I'll now hand back over to Dow Askmen for closing remarks.

Dale A. Asplund: Thank you, operator. As you can tell, we are extremely 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 BrightView, growing profitably, and creating meaningful shareholder value. With that, I thank everybody for joining our call today. Operator, you may now end the call.

Dale A. Asplund: Thank you operator.

Dale A. Asplund: As you can tell we are extremely excited about the opportunities ahead and I'm thrilled to be leading this great company through this important period.

Dale A. Asplund: Objectives are clear.

Dale A. Asplund: We're committed to becoming one bright view.

Dale A. Asplund: Growing profitably and creating meaningful shareholder value.

Dale A. Asplund: With that I, thank everybody for joining our call today, operator, you may now end the call.

Operator: Thank you. That concludes today's call. You may now disconnect your line.

Dale A. Asplund: Yes.

Speaker Change: Thank you that concludes today's call you may now disconnect your lines.

Operator:

Operator: [music].

Operator: Yeah.