BrightView Holdings, Inc. — Q2 FY2022 Form 10-Q
Reporting period: Fiscal quarter and six months ended March 31, 2022. Amounts are in millions of dollars except per-share data. BrightView provides commercial landscape maintenance, snow removal, enhancements, and development services through its Maintenance Services and Development Services segments.
Financial performance
| Metric | Three months ended March 31, 2022 | Year-over-year | Six months ended March 31, 2022 | Year-over-year |
|---|---|---|---|---|
| Net service revenue | $711.9 | +$60.0; +9.2% | $1,303.8 | +$97.5; +8.1% |
| Gross profit / margin | $157.1 / 22.1% | $158.1 / 24.3% | $297.0 / 22.8% | $291.7 / 24.2% |
| Operating income | $11.7 | $17.7 prior year | $3.3 | $14.0 prior year |
| Net income (loss) | $0.7; $0.01 per share | $6.3; $0.06 per share | $(12.1); $(0.12) per share | $(5.7); $(0.05) per share |
| Adjusted EBITDA | $59.7; 8.4% of revenue | $66.8; 10.2% | $102.3; 7.8% of revenue | $119.3; 9.9% |
| Operating cash flow | The filing’s cash flow statement provides six-month figures only | $42.3 | $83.4 prior year | |
| Free cash flow | The filing’s reconciliation provides six-month figures only | $(19.3) | $58.9 prior year |
Quarterly revenue growth reflected increases in both segments, especially Development Services. Gross margin and Adjusted EBITDA declined, with management citing higher materials and fuel costs; lower snow-removal revenue also weighed on Maintenance Services. Six-month revenue increased, but snow-removal weakness and cost inflation contributed to lower Adjusted EBITDA and a larger net loss.
Liquidity, debt, and capital allocation
- At March 31, cash and cash equivalents were $45.5, down from $123.7 at September 30, 2021. Current assets were $664.0 and current liabilities $525.7, giving reported working capital of $138.3, down from $214.7.
- Total debt, net, was $1,269.7, compared with $1,141.0 at September 30, 2021. This included $996.8 on the Series B term loan, $202.4 under the receivables financing agreement, and $80.0 drawn on the revolving facility.
- Six-month investing cash outflow was $145.7, including $64.2 of property and equipment purchases and $84.4 for acquisitions. Financing cash inflow was $25.2; it included $90.8 of common-stock repurchases and distributions, alongside borrowing and repayment activity.
- The company said it was in compliance with debt covenants at March 31 and believed available cash, operating cash flow, and borrowing capacity would fund obligations and planned needs for the next 12 months.
Business changes, outlook, and risks
- BrightView acquired six businesses during the six-month period for approximately $84.4, net of cash acquired; preliminary purchase accounting added $67.0 to goodwill. The valuation process was not complete at filing.
- Maintenance Services revenue for the quarter rose 3.3% to $553.4, while segment Adjusted EBITDA fell 13.0% to $62.9. Lower snowfall and higher fuel costs were cited as pressures. Development Services revenue increased 36.4% to $159.7, while segment Adjusted EBITDA rose 17.4% to $12.8; its margin nevertheless declined.
- The filing gives no specific numerical earnings or revenue guidance. Management described maintenance services as largely recurring and non-discretionary, but noted exposure to seasonality, weather, inflation, fuel and materials prices, labor availability, supply constraints, construction activity, and COVID-19 developments.
- On April 4, 2022, the company completed a previously agreed repurchase of 5,906,954 shares from MSD Valley Investments. On April 22, it refinanced its existing credit arrangements with a $1.2 billion term loan due 2029 and a $300 million revolving facility due 2027; the new facilities use Term SOFR or a base rate, with stated spreads and floors.
- Management reported no known legal matter expected to have a material effect on the company. Disclosure controls were assessed as effective; the filing reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether margin and cash-generation pressure persists as fuel, materials, labor, and seasonal snowfall affect results.
- Acquisition integration, final purchase-price allocations, and the returns generated on acquisition spending.
- Liquidity after the substantial decline in cash, ongoing repurchases, capital expenditures, and debt refinancing; confirm post-quarter debt balances, rates, and covenant headroom.
- The distinction between GAAP results and Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow, which are non-GAAP measures with company-defined adjustments.
- Share-repurchase disclosures: reconcile the quarter’s reported purchase activity with the separately disclosed April 4 completion and related cash outlay.