BrightView Reports Second Quarter Fiscal 2019 Results

Total revenue of $596.6 million, or 1.1% higher versus prior year

GAAP Net Loss of $3.6 million, or ($0.04) per share, Adjusted EBITDA
of $61.1 million and Adjusted Net Income of $15.6 million, or $0.15 per
share

Adjusted EBITDA and Adjusted EBITDA margin were among the highest
ever for the March quarter

Reaffirms full year fiscal 2019 guidance of $2.4 billion to $2.47
billion in Total Revenue and $310 million to $318 million in Adjusted
EBITDA

BLUE BELL, Pa.–(BUSINESS WIRE)–BrightView Holdings, Inc. (NYSE: BV) (the “Company” or “BrightView”),
the leading commercial landscaping services company in the United
States, today reported unaudited results for the second quarter ended
March 31, 2019.

Second Quarter Fiscal 2019 Highlights

• Total Revenues for the quarter totaled $596.6 million, a 1.1% increase
  versus the prior year quarter, with 2.9% higher Maintenance Services
  Segment revenues and 5.4% lower Development Services Segment revenues;
• Net Loss of $3.6 million, or ($0.04) per share, and a net loss margin
  of 0.6%, compared to Net Loss of $22.1 million, or ($0.29) per share,
  and a net loss margin of 3.7%, in the prior year quarter;
• Adjusted EBITDA of $61.1 million, or 18.4% growth over the prior year
  quarter, with an Adjusted EBITDA margin of 10.2%, both of which were
  among the highest ever for the March quarter;
• Adjusted Net Income of $15.6 million, or $0.15 per share, compared to
  Adjusted Net Income of $7.6 million, or $0.10 per share, in the prior
  year quarter.

Six Months Fiscal 2019 Highlights

• Total Revenues for the six months totaled $1,122.7 million, a 1.6%
  decline versus the prior year period, with nearly flat Maintenance
  Services Segment revenues and 6.5% lower Development Services Segment
  revenues;
• Net Loss of $12.4 million, or ($0.12) per share, and a net loss margin
  of 1.1%, compared to Net Loss of $2.7 million, or ($0.04) per share,
  and a net loss margin of 0.2%, in the prior year period;
• Adjusted EBITDA of $111.2 million, or 5.8% below the prior year
  period, with an Adjusted EBITDA margin of 9.9%;
• Adjusted Net Income of $26.0 million, or $0.25 per share, compared to
  Adjusted Net Income of $21.0 million, or $0.27 per share, in the prior
  year period.

“Strong Maintenance Segment revenue and profitability highlighted our
second quarter results and drove growth at the consolidated level. In
fact, we delivered one of our best ever March quarters, with notable
performance in Adjusted EBITDA and Adjusted EBITDA margin. In addition
to gains in our Maintenance business, the quarter included lower
corporate expenses, and more normalized levels of snowfall,” said Andrew
Masterman, BrightView President and Chief Executive Officer. “With the
beginning of the ‘green’ season, we’re pleased with the trends in our
Maintenance landscape revenue and have built a robust book of business
for the remainder of the fiscal year in our Development Segment. We
remain confident in our full-year outlook and are maintaining our
guidance ranges for both total revenue and Adjusted EBITDA for the
full-year fiscal 2019.”

Fiscal 2019 Results – Total BrightView

For the second quarter fiscal 2019, total revenue increased 1.1% to
$596.6 million due to an increase in Maintenance Services Segment
revenue, partially offset by a decline in Development Services Segment
revenue. Total Adjusted EBITDA increased 18.4% driven by an increase in
the Maintenance Services Segment coupled with a reduction of corporate
expenses, partially offset by a decrease in the Development Services
Segment Adjusted EBITDA, as discussed further below.

For the six months ended March 31, 2019, total revenue decreased 1.6% to
$1,122.7 million due to declines in both the Maintenance Services
Segment and Development Services Segment revenues. Total Adjusted EBITDA
was $111.2 million, down 5.8% versus the prior year, driven by lower
revenues, partially offset by a reduction of corporate expenses.

Fiscal 2019 Results – Segments

For the second quarter fiscal 2019, revenue in the Maintenance Services
Segment increased 2.9% to $473.3 million. Landscape Maintenance Services
revenue increased 4.4%. Acquisitions added 8.4% but were partially
offset by a 4.0% negative revenue contribution from commercial
landscaping, including lower revenue due to Managed Exits as the Company
strategically reduced a number of less profitable accounts established
in previous years. Including revenue contribution from acquisitions,
snow removal services revenue increased 0.8%.

Adjusted EBITDA for the Maintenance Services Segment in the quarter
increased 11.5% to $65.0 million, with the Adjusted EBITDA margin
increasing 100 basis points versus the prior year quarter. The increase
in segment profitability was mainly a result of the increase in revenue
described above, coupled with a continued focus on efficiency
initiatives to reduce overhead, personnel and related costs across the
Company’s core functions.

For the six months ended March 31, 2019, revenue in the Maintenance
Services Segment remained relatively flat at $865.8 million. Landscape
Maintenance Services revenue increased 0.5%. Acquisitions added 7.2% but
were mostly offset by a 6.7% negative revenue contribution from
commercial landscaping, including a difficult comparison with the
revenue related to Hurricane Irma and Maria clean-up, the final impact
from the prior-year turnover of national accounts, and lower revenue due
to Managed Exits as the Company strategically reduced the number of less
profitable accounts established in previous years. Snow removal services
revenue decreased 1.6% due to lower year-over-year snowfall in key
geographies, especially during the first quarter of fiscal 2019.

Adjusted EBITDA for the Maintenance Services Segment for the six months
ended March 31, 2019 decreased 4.4% to $113.7 million, with the Adjusted
EBITDA margin decreasing 60 basis points versus the prior year period.
The decline in segment profitability was mainly a result of
higher-margin hurricane clean-up activity in the first quarter of fiscal
2018 and a decline in the contribution from snow removal services due to
timing and below average snowfall during the first quarter compared to
the prior year quarter.

Revenues for the Development Services Segment decreased 5.4% to $124.0
million for the second quarter fiscal 2019. Project revenue derived from
acquisitions coupled with commencement of work on new projects
contributed to offset a decrease driven by the timing of work performed
on certain large projects during the prior year period.

Adjusted EBITDA for the Development Services Segment decreased 14.3% to
$11.0 million in the quarter, negatively affected by the decrease in net
revenue described above, as well as an increase in selling, general and
administrative expense, which was the result of a cash collection in the
second quarter of fiscal 2018 on a previously reserved receivable.

Revenues for the Development Services Segment decreased 6.5% to $258.4
million for the six months ended March 31, 2019. Project revenue derived
from acquisitions coupled with commencement of work on new projects
partially offset a challenging comparison with revenues generated from
work performed on certain large projects in the prior year period.

Adjusted EBITDA for the Development Services Segment decreased 15.8% to
$28.1 million during the six months ended March 31, 2019, negatively
affected by the decrease in net revenue described above, as well as an
increase in selling, general and administrative expense as described
above.

Net cash provided by operating activities for the six months ended March
31, 2019 was $64.7 million, compared to $79.2 million for the prior
year. The decrease was primarily due to an increase in accounts
receivable due to timing of collections, partially offset by an increase
in deferred revenue. Adjusted Free Cash Flow for the six months ended
March 31, 2019 was $25.1 million, a decrease in cash generation of $33.1
million versus the prior year. The decrease is reflective of the
decrease in net cash provided by operating activities as well as an
increase in capital expenditures excluding the fiscal 2018 purchase of
legacy ValleyCrest facilities of $21.6 million.

For the six months ended March 31, 2019, capital expenditures were $42.6
million, compared with $44.1 million last year. The prior year period
included the aforementioned purchase of legacy ValleyCrest facilities.
The Company also generated proceeds from the sale of property and
equipment of $3.0 million and $1.5 million in the first half of fiscal
2019 and 2018, respectively. Net of the legacy asset purchase and the
proceeds from the sale of property and equipment in each year, capital
expenditures represented 3.5% and 1.8% of revenue in the first half of
fiscal 2019 and 2018, respectively.

As of March 31, 2019, the Company’s Total Net Financial Debt was $1.174
billion, an increase of $24.9 million compared to $1.149 billion at the
fiscal year end. The Company’s Total Net Financial Debt to Adjusted
EBITDA ratio was 4.0x as of March 31, 2019, compared with 4.1x as of
December 31, 2018.

Recent Developments

New Independent Board Members
On April 15, BrightView
announced the appointment of Jane Okun Bomba, President of Saddle Ridge
Consulting, and Mara Swan, Executive Vice President of Global Strategy
and Talent at ManpowerGroup, as independent members of its Board of
Directors. The appointments of Ms. Okun Bomba and Ms. Swan expands the
size of the board to eight members, four of whom have been determined to
be independent.

New Corporate Headquarters in Blue Bell, Pa.
During the week
of April 29, 2019, the Company relocated its Corporate Headquarters to a
new facility in Blue Bell, Pennsylvania. The new headquarters
consolidates various corporate work groups from around the country. It
is also the new site of the BrightView National Training Center, which
will offer an expanded curriculum and train a larger number of its field
personnel across a number of topics designed to drive incremental sales,
improve customer retention and develop the Company’s future leaders,
among other initiatives.

Conference Call Information

A conference call to discuss the second quarter fiscal 2019 financial
results is scheduled for May 8, 2019, at 10 a.m. Eastern Daylight Time.
The U.S. toll free dial-in for the conference call is (877) 273-7124 and
the international dial-in is (647) 689-5396. The conference passcode is
7885175. A live audio webcast of the conference call will be available
on the Company’s investor website https://investor.brightview.com,
where presentation materials will be posted prior to the call.

A telephone replay will be available shortly after the broadcast through
May 15, 2019, by dialing 800-585-8367 from the U.S., and entering
conference passcode 7885175. A replay of the audio webcast also will be
archived on the Company’s investor website.

About BrightView

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

Forward Looking Statements

This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of
1934. These statements include, but are not limited to, statements
related to our expectations regarding the performance of our industry,
growth strategy, goals and expectations concerning our market position,
future operations, margins, profitability, capital expenditures,
liquidity and capital resources and other financial and operating
information. You can identify these forward-looking statements by the
use of words such as “outlook,” “guidance,” “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,”
“projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”
or the negative version of these words or other comparable words. Such
forward-looking statements are subject to various risks, uncertainties
and factors, including general economic and financial conditions;
competitive industry pressures; the failure to retain certain current
customers, renew existing customer contracts and obtain new customer
contracts; a determination by customers to reduce their outsourcing or
use of preferred vendors; the dispersed nature of our operating
structure; our ability to implement our business strategies and achieve
our growth objectives; acquisition and integration risks; the seasonal
nature of our landscape maintenance services; our dependence on weather
conditions; increases in prices for raw materials and fuel; product
shortages and the loss of key suppliers; our ability to accurately
estimate costs of a contract; the conditions and periodic fluctuations
of real estate markets, including residential and commercial
construction; our ability to retain our executive management and other
key personnel; our ability to attract and retain trained workers and
third-party contractors and re-employ seasonal workers; any failure to
properly verify employment eligibility of our employees; subcontractors
taking actions that harm our business; our recognition of future
impairment charges; laws and governmental regulations, including those
relating to employees, wage and hour, immigration, human health and
safety and transportation; environmental, health and safety laws and
regulations; the distraction and impact caused by litigation, of adverse
litigation judgments or settlements resulting from legal proceedings;
increase in on-job accidents involving employees; any failure,
inadequacy, interruption, security failure or breach of our information
technology systems; any failure to protect the security of personal
information about our customers, employees and third parties; our
ability to adequately protect our intellectual property; occurrence of
natural disasters, terrorist attacks or other external events; our
ability to generate sufficient cash flow to satisfy our significant debt
service obligations; our ability to obtain additional financing to fund
future working capital, capital expenditures, investments or
acquisitions, or other general corporate requirements; restrictions
imposed by our debt agreements that limit our flexibility in operating
our business; increases in interest rates increasing the cost of
servicing our substantial indebtedness; and counterparty credit
worthiness risk or risk of non-performance with respect to derivative
financial instruments. Additional factors that could cause BrightView’s
results to differ materially from those described in the forward-looking
statements can be found under “Item 1A. Risk Factors” in our Form 10-K
for the fiscal year ended September 30, 2018, as such factors may be
updated from time to time in our periodic filings with the SEC, which
are accessible on the SEC’s website at www.sec.gov.
Accordingly, there are or will be important factors that could cause
actual outcomes or results to differ materially from those indicated in
these statements. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements
that are included in this release and in our filings with the SEC. Any
forward-looking statement made in this press release speaks only as of
the date on which it was made. We undertake no obligation to publicly
update or review any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as required by
law.

Non-GAAP Financial Measures

To supplement the Company’s financial information presented in
accordance with GAAP and aid understanding of the Company’s business
performance, the Company uses certain non-GAAP financial measures,
namely “Adjusted EBITDA”, “Adjusted EBITDA Margin”, “Adjusted Net
Income” “Adjusted Earnings per Share” and “Adjusted Free Cash Flow”. We
believe Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Earnings per Share and Adjusted Free Cash Flow assist investors
and in comparing our results across reporting periods on a consistent
basis by excluding items that we do not believe are indicative of our
core operating performance. Management believes these non-GAAP financial
measures are useful to investors in highlighting trends in our operating
performance, while other measures can differ significantly depending on
long-term strategic decisions regarding capital structure, the tax
jurisdictions in which we operate and capital investments. Management
regularly uses these measures as tools in evaluating our operating
performance, financial performance and liquidity. Management uses
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
Earnings per Share and Adjusted Free Cash Flow to supplement comparable
GAAP measures in the evaluation of the effectiveness of our business
strategies, to make budgeting decisions, to establish discretionary
annual incentive compensation and to compare our performance against
that of other peer companies using similar measures. In addition, we
believe that Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, Adjusted Net Income per Share and Adjusted Free Cash Flow are
frequently used by investors and other interested parties in the
evaluation of issuers, many of which also present Adjusted EBITDA,
Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Earnings per Share
and Adjusted Free Cash Flow when reporting their results in an effort to
facilitate an understanding of their operating and financial results and
liquidity. Management supplements GAAP results with non-GAAP financial
measures to provide a more complete understanding of the factors and
trends affecting the business than GAAP results alone.

Adjusted EBITDA: We define Adjusted EBITDA as net income (loss) before
interest, taxes, depreciation and amortization, as further adjusted to
exclude certain non-cash, non-recurring and other adjustment items.

Adjusted EBITDA Margin: We define Adjusted EBITDA Margin as Adjusted
EBITDA, defined above, divided by Net Service Revenues.

Adjusted Net Income: We define Adjusted Net Income as net income (loss)
including interest and depreciation, and excluding other items used to
calculate Adjusted EBITDA and further adjusted for the tax effect of
these exclusions and the removal of the discrete tax items.

Adjusted Earnings per Share: We define Adjusted Earnings per Share as
Adjusted Net Income divided by the weighted average number of common
shares outstanding for the period.

Adjusted Free Cash Flow: We define Adjusted Free Cash Flow as cash flows
from operating activities less capital expenditures, net of proceeds
from the sale of property and equipment, further adjusted for the
acquisition of certain legacy properties associated with our acquired
ValleyCrest business.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted
Earnings per Share and Adjusted Free Cash Flow are not recognized terms
under GAAP and should not be considered as an alternative to net income
(loss) or the ratio of net income (loss) to net revenue as a measure of
financial performance, cash flows provided by operating activities as a
measure of liquidity, or any other performance measure derived in
accordance with GAAP. Additionally, these measures are not intended to
be a measure of free cash flow available for management’s discretionary
use as they do not consider certain cash requirements such as interest
payments, tax payments and debt service requirements. The presentations
of these measures have limitations as analytical tools and should not be
considered in isolation, or as a substitute for analysis of our results
as reported under GAAP. Because not all companies use identical
calculations, the presentations of these measures may not be comparable
to other similarly titled measures of other companies and can differ
significantly from company to company.

Contacts

INVESTOR RELATIONS CONTACT:
Daniel Schleiniger, VP of
Investor Relations
484.567.7148
[email protected]

MEDIA CONTACT:
Fred Jacobs, VP of Communications & Public
Affairs
484.567.7244
[email protected]

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