Brightview Holdings Inc (BV) 2024 Q1 法說會逐字稿

(technical difficulty)Fourth, as we achieved meaningful progress on our objectives outlined under one BrightView.

On our last earnings call, we set a clear and refreshed strategy, prioritize our employees, align our core businesses, while ensuring our customers comfort, focus on profitable growth and unify the company under one BrightView.

During the quarter, we began to successfully execute on this strategy by aligning our sales force to our local operating branches, reintegrating quarter self-perform businesses back into our branches, deemphasizing non-core portions of our business and continuing to focus on pursuing higher quality profitable business.

While these actions led to a modest impact on our maintenance revenue for the quarter.

I am confident we are taking the necessary steps to ensure growth in the medium and long term.

I am also pleased to report that for the sixth quarter in a row, our development business once again showed significant growth and margin expansion.

Additionally, we are proving our commitment to becoming more efficient and removing cost with improvement in our corporate segments.

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

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

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

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

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

We have attained a substantial valuation in the private markets, well above our current trading multiple, providing proceeds that we intend to reinvest in our core business.

The enhancements we have made in our business align with our overarching initiative to operate as a unified BrightView.

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

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

This starts by focus on the [tenant from employer]of choice, and we are doing this by reinvesting in our core businesses and our employees.

We are making investments in our fleet and investing in the health, safety and development of our team.

We are also streamlining and optimizing organizational structures at the branch level, resulting in a revitalized go-to-market strategy.

We renewed focus on improving how we service our customers.

With the goal of increasing retention and growing profitably.

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

On slide 5, we show one BrightView in action and provide a few specific examples of the improvements we have made in the early stages of this value creation journey.

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

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

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

We are leveraging these findings to further refine and strengthen our go-to-market approach.

An example of this go-to-market strategy was the reintegration of our Tree and Golf services into our core maintenance franchise.

This streamlined operations internally, but also helps us deliver more efficient, collaborative and unified services for the customer.

We are focused on becoming the partner of choice and taking actions to enhance our positioning, which will allow for opportunities to grow our business with existing customers and win new customers.

As the nation's largest provider in our industry, there is tremendous opportunity to leverage our size and scale to drive efficiencies across the business.

While improving essentials functions such as safety, training and the centralization of operations to better align and support our core business.

Moving to slide 6 and before turning the call over to Brett to discuss our financial results for the quarter, I want to remind everyone that the focus of one BrightView begins with becoming the employer of choice.

We do that by putting our employees first and by developing a culture, where people seek to achieve individual and group success.

We prioritize our employees.

So, they have the capabilities, training and equipment required to do their jobs at a high level. Doing this materially impact the level of service provided to customers and leads to an exceptional customer experience.

By making these investments in our employees and in turn employees taking care of our customers, we will become the partner of choice in our industry.

We are focused on improving customer retention and accelerating profitable growth by bringing on new customers and expanding relationships with existing customers.

Once we have established a strong foundation for profitable growth in new and a unified BrightView, we will be in a position to expand strategically.

M&A can be a powerful lever for growth and generate meaningful returns on capital.

But only when it fits strategically, culturally and financially.

As one BrightView, we have the best at what we do, and I am confident that we can continue to deliver on these goals.

With that, I will turn it over to Brett, who will discuss our financial performance and outlook in more detail.

Brett?

Thank you, Dale, and good morning, everyone.

I will start on slide 8.

I am pleased to report that fiscal '24 is off to a good start with our strategy towards one BrightView showing positive signs in the first quarter.

A continued focus on profitable growth and land maintenance.

Another quarter of strong performance in development and execution of our cost efficiency plan led to quality revenue and EBITDA margin expansion for the business.

Important to note, during the quarter, our performance was impacted by the year-over-year decline in snowfall.

When normalizing for snowfall, consistent with the prior year, our overall profitability and margins would have shown significant improvement.

More to come on that later in the presentation.

Our enhanced net working capital, coupled with the timing of capital intensity and reduced interest expense, resulted in a meaningful increase of free cash flow compared to the prior year.

This resulted in a net leverage ratio of 2.9 times, allowing for financial flexibility for ongoing execution of our profitable growth strategy and investment in the business.

Moving to slide 9.

Total revenue during the quarter decreased 4.5% year-over-year to $627 million.

Maintenance was impacted by snow that decreased $22 million due to lower snowfall, a decline in ancillary services and a continued focus on core self-perform business.

Partially offsetting these headwinds was the solid demand in our development business, which grew by an impressive 6.3% compared to the prior year.

Due to our ability to convert our strong backlog into higher project volume.

Developments performance in recent quarters reflects the appealing nature of the business model, while also creating momentum and opportunities for future growth.

Turning now to profitability and the details on slide 10.

Total adjusted EBITDA for the first quarter was $46.7 million, a decrease of roughly $2 million, reflecting early benefits from our one BrightView initiatives and improved profitability offset by the impact of lower snowfall.

As I mentioned before, on a similar snowfall to prior year, Q1 EBITDA would have exceeded the prior year results.

In the maintenance segment full adjusted EBITDA of $42 million down $8million compared with the prior year, driven by the previously mentioned revenue snowfalls for primary(technical difficulty)

In the development segments, adjusted EBITDA for the first quarter was $19.6 million, an increase of approximately 19% compared to the prior year.

Adjusted EBITDA margin expanded 110 basis points, which marks our sixth consecutive quarter of development margin expansion.

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

In our corporate segment, expenses for the first quarter decreased year-over-year as we made significant progress with our one BrightView strategy to increase efficiencies across our core functions and reduce overhead.

Turning now to slide 11 to discuss the timing impact of snow.

As I alluded to earlier and in an effort to enhance transparency in evaluating our quarter's performance, we have normalized Q1 results for snowfall, assuming comparable levels with the previous year.

The comparison highlight increase in EBITDA and additional margin expansion, underscoring the effectiveness of our initiatives and commitment to achieving more profitable growth.

Also, this emphasizes the importance of evaluating our business on a full year basis, as the timing and magnitude of snowfall changes year-to-year.

For example, this year we didn't see snowfall in late December, but we did see meaningful snowfall in January.

Let's now turn to slide 12 to review our free cash flow capital expenditures and debt.

For the quarter, we are extremely pleased with our free cash flow generation of $17 million compared to a usage of $55 million in the prior year period.

As we communicated on our prior call, we are committed to reinvesting back into the core business and executing our renewed capital allocation strategy.

With this said, we are maintaining our cash flow and CapEx guidance for the full year.

Net leverage for the quarter came in at 2.9 times compared to 4.9 times in the prior year period.

A lower leverage reflects the significant reduction in our debt as a result of one-offs investment, improved liquidity and profitability growth in the business.

Our leverage profile allows for financial flexibility for ongoing execution of our profitable growth strategy and investment in the business.

Moving to slide 13, and as Dale mentioned earlier in the call, we are executing on our strategy by focusing on our core business.

A positive example of this action is the divestiture of our non-core US launch franchise business.

We sold this business for roughly $52 million in proceeds, reflecting a double digit EBITDA multiple.

This opportunistic transaction generated meaningful returns and allows us to better focus on our core business and reinvest proceeds into driving further efficiencies and profitable growth.

We plan to use these cash proceeds to accelerate the execution of our capital investment plan by replacing aging fleet, buying new Lawn Mowers and continuing to make significant investments in health and safety of our employees.

Let's now turn to slide 14 to review our outlook for fiscal '24.

Profitable growth will continue to be our guiding factor and key focus.

I am pleased to reiterate that we are reaffirming our full year revenue, EBITDA and free cash flow guidance.

We expect total revenue of $2.825 billion to $2.975 billion, reflecting a range of flat to 5% revenue growth.

We continue to assume the following underlying assumptions.

(inaudible) we expect our focus on profitable growth to continue to have a near-term impact to remain encouraged by the underlying health of the market and recent trends in our business.

(technical difficulty)Our fiscal '24 guidance range assumes flat at the low end and a five year historical average at the high end.

While Q1 started slow, we saw a meaningful pickup in snowfall events in January as we move into the second quarter.

And for development, the growth and conversion of our strong backlog of projects will continue to benefit revenue.

Moving to adjusted EBITDA, one BrightView will be the key drivers of growing profit and expanded margins.

In fiscal '24, we continue to expect margin expansion in both maintenance and development segment benefiting from key initiatives and disciplined management of the business.

We expect these improvements to generate total margin expansion of 40 to 80 basis points and adjusted EBITDA of $310to $340 million.

In fiscal '24, we expect a continuation of healthy cash flow generation, driven by profitable growth and improved operating performance.

Our outlook reflects our commitment to (inaudible)and investment in our core business.

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

Altogether, we continue to expect to generate free cash flow of $45 to $75 million, supporting the financial flexibility we maintain today, while enhancing our ability to generate future profitable growth.

With that, let me turn the call back to Dale to wrap up on slide 15.

Thank you, Brett.

Before opening the call for questions, I would like to provide a few final thoughts.

We are making significant progress on our goals, and we are seeing the returns on these efforts begin to materialize in our results and gaining traction across the company.

As we transform this business, I continue to believe there are tremendous opportunities ahead of us.

We are moving this business forward and we are strategically positioned to accelerate profitable growth and to create meaningful value for our shareholders.

We will now open the call for questions.

Thank you.

(Operator Instructions)

Bob Labick, CJS Securities.

Thank you.

Good morning.

Our very excited for the transformation you are driving at BrightView.

Thanks, Bob.

I wanted to start, you gave us some great details in the introduction for sure.

Maybe you could start with some of the key metrics, key operating metrics you are focused on improving this year fiscal '24 and how you will share that progress with investors throughout the year?

Yes, that's great.

I would just say it's the number one.(inaudible) that we are monitoring is profitable growth.

I think that's a reoccurring theme that we keep talking about.

We want to make sure as we grow this business on the bottom line.

So, expanding margins, making sure we see growth in our EBITDA is critical in our path forward.

We have a lot of internal metrics, Bob, that we are monitoring and some of the work that we did over the summer during the transition, as Jim stepped in to help the business and we transform.

It's the Project Liberty, really got us going on a lot of internal work such as customer retention and conversion rate.

We are monitoring that on a daily basis, but we won't be sharing that externally.

I think from the external view, profitable growth should be that North Star that you guys stay on top of.

But Brett, you want to add anything about?

I would just say, absolutely profitable growth.

Moving towards one BrightView, as you have seen the [script] aligning the business, aligning our sales force, aligning incentive plans and making sure everyone is marching towards the same profitable full growth goal, absolutely part of hard drive.

I would say the other thing is core business focus.

And a huge highlight in the quarter or subsequent events of the quarter was us divesting our non-core US lawn franchise business.

And as we move forward, I think, if we were to share any more data or information publicly, it would be probably on our non-core businesses and some of the impact they have on the total.

But it's really, really excited, as you think about the quarter and you think about that subsequent event for US Lawn, I think if we are going to share more can be more things like US Lawn type non-core businesses that we are focused on evaluating and figuring out fit long term in the portfolio.

Okay.

Super.

And then you touched on this, one of your bullets as well, maybe expand a little on how do you get the benefit of scale as the largest operator in the US, but it's a decentralized business.

So, it's kind of like opposite ends there.

So, how can you improve operations and get the benefit of your scale based on where you stand today?

So, I think obviously, leveraging our size and scale and the more we can look to centralize, the more we can leverage and create consistency across our business and allow all of our frontline operators to really focus on the customer.

So, we have so many things that today we might still have out in the field with our branches focused on.

We have got to rethink and centralize and leverage the size and scale.

So, we not only do more consistently, we can do more efficiently.

So, I think a good one that we are working on right now.

Bob is an example.

We just started the process of taking our field finance partners and centralizing them to drive that efficient and more consistent support of our field operators.

You can see this and even the way we are doing it, Bob, if you look at our numbers that we just reported, our corporate cost structure came down by $3.5 million year-over-year in Q1.

So, there is a huge opportunity to centralize and do it more efficiently.

So, it's a double benefit when we do it.

So, I hope that gives you a little more detail.

Yes.

No, that's great.

And last one for me, I promise.

I think I know the answer, but I just wanted to kind of say it again.

In terms of, if you look out three to five years and the growth of the profitable growth of BrightView.

Will it be more account growth and retention.

So, or will it be more higher margins per account as the key drivers?

Where is the focus on, pricing and margin per account?

Or is it more accounts, better retention, et cetera?

How would you distinguish between those two things driving your growth?

Yes, I think it's all of the above we can start with.

I think the first and foremost focus we have and our partners at one rock are helping us as we try to set focus on this.

And we actually saw a modest little improvement in Q4 year-over-year is the retention of existing customers.

And we have to make sure that the customers that are our customers today see the value we provide and continue to be our customers long term.

And if perhaps the service they are getting doesn't match the level of price they are paying.

We have got to work with them and figure out how we can provide the service that matches the price or figure out a way to make sure that the price gets adjusted to the right level.

But obviously, keeping our existing customer base is key to driving growth in this business.

But it's also making sure, Bob, we are going after the target customer segment we have.

We franchise business we sold was more focused that a little bit of the residential business, which is not our focused end market.

We want to go after the commercial business.

That's our target customer that the size and scale of BrightView, we can add value across the nation.

So, it's going to be both, make sure we retain every account we can, make sure our customers see the value we provide and then grow as many new accounts that fit our target audience at the right price that we can.

And when we do that, you will see that organic growth start coming back into the business.

Super.

Thanks so much.

Thank you, Bob.

Thanks, Bob.

Andrew Wittman, Robert W Baird & Co.

Great.

Good morning, and thank you for taking my questions, guys.

This whole strategy about kind of focusing on the core, even exiting things that are seen as non-core.

Obviously, the franchise, a transaction here subsequent to quarter end is a good example of that.

I think you guys have also talked about sort of your national account business is something that you are looking at as well.

And then there is the whole just kind of basic thing of there is some customers that you are probably servicing right now that aren't very profitable.

So, I guess taken as a whole, maybe Dale, could you talk about one little bit more of the detail behind why franchise business was noncore and how that computes and what the thought process is on the national account business there, too, block some of that business that kind of talking national account.

I am talking about externally serviced national account business, I think you call it BES or something like that.

Maybe you can talk about what that means and what kind of work that's getting and then where you are, how far along are you and portfolio customer review and exiting those customers, which really don't give you the return of the profit margin that your services should deserve kind of a long question, but I think they are all kind of thematically relevant together.

I think, I have got them all waved in my head.

So, let's start to get through Andrew.

So, first of all, why is the US Lawn's noncore to us?

We are transforming this business and we are trying to develop better ways to support our branches and our sales force out in the field.

Our US Lawn's non core franchise business was getting all the benefits that we are providing our branch managers by being part of our franchise network, yet they really were not targeted at going after the same customer base, but over time, unfortunately, as they transition from some of the residential customers to more of the commercial.

We began to see those direct franchisees competing against our local branches using the similar playbook and tool book, leveraging our estimating skills, leveraging our purchasing power to run their businesses.

That's not what we want to do.

We wanted to make sure that the investments we make to improve this business goes to the benefit of our branch managers and the branches out in the field.

And the added value was, we were able to get a significant multiple above our trading level today to divest this business.

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

Now, the other area that you talked about, you classified it correctly, not really national accounts, we still believe we can add huge value to our national account group, but more of the non-core business that we outsource and we really act as a broker.

And we are an aggregator for customers to come to and then we work with local providers to provide that service.

There again, that business is going to fall into one or two buckets, and we are evaluating this right now.

It's going to be business that we want to self-perform and we can add value and we can be the service provider and control the quality of the customer gets.

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

That is too much of a risk for us, and we don't want to jeopardize our relationship with big accounts that we don't control the end service.

So, we are going to evaluate that aggregator business and we are going to decide how that will make sense for us on a go forward basis.

And we will give you guys everybody on the call an update at the end of Q2.

And that business today is broken into both snow and land, and we are working with all of partners on snow this year.

And then we are making determinations on land, which will be coming up for the summer in most markets.

So, I think that is two of them. [You have] another piece of it.

Well, this whole idea of just portfolio review of your underlying customers and in customer access, the whole idea of addition by subtraction Anything you could do just maybe clarify this or make a little finer point.

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

Yes, good question.

I think, I would just say overall with roughly, let's just call it 50, 50, 60 40 depends on how much it snows.

Our brokerage businesses, like we have said in the past is roughly about $100 million.

So, and we will give you an update on Q2 that gives you exactly how much we think we can self-perform and how much we will look at transitioning out.

On the other larger accounts, I think our team has done a pretty good job continuing to mitigate some of the ones that as inflation worked through the business, they weren't priced right.

So, the team continues to make some progress there.

We do have some larger contracts that were done at a time that maybe it wasn't of focus to be profitable growth and it was more to grow the business.

So, we have done some adjustments, a few large municipal contracts with multiple years that we still have that we have got to work through.

But I will tell you, Andy, we should be able to run that business just with our sales efforts that we are doing.

If we are going to give you any headwinds from our revenue is going to come really from that aggregator BES business that you mentioned.

And we promise we will get through the snow season with our customers and we will give a full update once our branches decide where and where they can best self-perform the work that we have, but great question.

Okay.

Yes, that's super helpful.

And then just a follow-up here.

It has to do with snow.

So, you guys, obviously, December is what it was to get to the low end of your guide.

You need $170 million effectively here in the March quarter.

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

So, we don't want to obviously give inter-quarter numbers, but what we can indicate to everybody, we have confidence in our range and we feel like Brett had said in his opening comments, Andy, where we are as we work through Q1 and January, we feel we are pretty close to where we were last year, which makes us feel very comfortable that we will land in that range.

And I just remind everybody.

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

So, we actually think there could be more of that upside.

That's why we kept that range with a midpoint somewhere around 240.

But we are very, very comfortable, Andy.

We are going to get in the low end minimum and probably more towards the midpoint of that range when we think about it, if it snows like what we have seen in the past in February and March.

Thanks, guys.

Have a good day.

Tim Mulrooney, William Blair.

Yes, thanks.

Good morning, Dale and Brett.

So, Brett, if I am doing the math right, it looks like the maintenance land business was down about 5% organically, if you exclude that 3.2, then acquisitions.

And am I doing the math right there?

Yes, on the total, you are doing the math right, Tim, it's down about $19 million for land for maintenance plan excluding snow.

So my question is, did that hit your expectations or was it a little softer than you expected?

And I am asking because based on the midpoint of your guide for this segment for about flat organic for the full year.

You are starting the first quarter down five at flat for the full year at the midpoint, it looks like you would be expecting a pretty strong second half of the year.

Am I thinking about that the right way?

You are thinking about that the right way, Tim, as you look at our first quarter, we did, we are not giving quarterly guidance.

We came out last at the end of Q4 gave annual guidance and we we tried to say the first couple of quarters may be a little choppy and on more towards the negative two or a little bit more than that ended in the back half of the year would be flat to the positive end.

But a couple of things to call out there in Q1, we did expect right around where we landed the biggest piece that we really didn't talk a lot about at the end of Q4, and we are not really talking a lot about now, but as the hurricane we had last year.

We had hurricane come through the south eastern part of the United States.

That was roughly half of our land [miss] came from that hurricane year-over-year comp.

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

Tim, I think as you move into the last nine months of the year, I think you would expect there won't be a comp for hurricane in Q2, but there will be some of that work still on ongoing with focusing on our core business deemphasizing, as Dale mentioned, our non-core business, specifically our aggregator business called BES.

And we are working through snow now, but when it comes to land, we will have a fulsome update here at the end of Q2, because, we are actively working through negotiations with clients now.

And we expect those to be done primarily done here by the end of Q2, and we will give an update on if any impact will come from that business what that looks like for Q2, Q3 and Q4

Okay.

I understand that was very clear.

Thank you for walking me through that.

So, I got that.

I wanted to ask about your switching gears here a little bit to the ancillary work, which I know you highlighted some softness in the inquiry business this quarter and maybe you even made reference to it last quarter too.

I don't remember, but my questions on the ancillary are number one.

Curious what you think is driving that decline in demand, would just be interested in your perspective?

And because, I know that was out of scope work can sometimes be helpful to margins and would assume that's something you better see more of.

And number two is what percentage you maintenance plan business would you estimate is a player revenue for US based contract revenue?

I think I remember on the [HPO] was like 75, 25.

I don't know, if that ratio is still relevant.

Sorry to cut you off there.

Yes, no problem, Tim, sorry to cut you off.

I will start with the second question, your answer to the total land revenue is about 75, 25, maybe even 70, 30 range or what's contract other specialty services versus pure ancillary.

So, that's kind of generally the way, if you take the full land, the land revenue.

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

Majority was Q1.

As you think about the total hurricane that happened last year, think about the total Q1 comp.

All that hurricane revenue was ancillary revenue that came through the south eastern part of United States.

And as you sit here today, we really didn't have any ancillary issue in Q4 coming out of last year.

We don't expect to see any ancillary challenges in the back half of this year or back three quarters of this year.

Our ancillary backlogs are at an all-time high.

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

If it snows a lot more here in Q2.

We may do a little bit less ancillary in Q2, but the backlogs are at an all-time high.

If you look at that number, which we track, we don't disclose total, but it's up roughly about 10% year-over-year.

And what we are bidding and customers are buying and that's specifically in the land business.

Got it.

Okay.

So, actually that's could be here because, I kind of think about that as a good sign that (inaudible) generally talks about spend a little bit more on this or that throughout the year.

So, there is no signs of a decline in demand.

It's just some.

(multiple speakers)

Yes, Q1 to hurricane comp issue for ancillary.

That's why we called it out in the.

But when you think about the health of the business.

In the market, we see no signs of any type of weakness in the market.

We see ancillary backlogs in our land business up about 10% year-over-year.

We see our new sales pipeline in the land business up year-over-year.

And if you look at our development business, we are seeing extreme positivity in that business, not only on the margin side, but from a revenue growth side, it's been six quarters in a row, really growing that business at mid single digit growth rates and our backlog for development is essentially stalled through this year, and we are selling into the first half of 2025 at this point.

So, we see really positive signs of momentum, not only on the upselling on the land side of the business, but also on the development side of the business.

Got it.

Thank you very much for taking my questions.

Andrew Steinerman, JPMorgan.

Hi, guys.

This is Andrew Steinerman.

I just wanted to dive into sort of the tension between centralizing and decentralizing here in the business.

I know this isn't the first time that BrightView has made structural changes in what roles become centralized what roles become decentralized, they will be maybe helpful to hear your thoughts on that.

And then I have a follow-up question on capital allocation.

Yes, it is the number one way that we can add value to our field operations people by taking noncustomer-facing work away from in centralizing and allow them to spend more time with customers, which will inevitably help us be a better partner to our customers.

So, there are things, Tim, when we talk about interacting with the customer that, I am sorry, Alex, that we definitely we want to do at our branches.

And I want every branch focused on those customer facing activities.

And then there is the non-value things that you have to do to process, whether it be AP or collect day or support financial functions.

So, we don't want our operators distracted by.

We want them focused on customer facing work.

So, I know that the company has gone back and forth from centralization to decentralized, but even when they did decentralized stuff, a lot of the area was just decentralizing into different markets.

It wasn't giving everything directly back to the brand.

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

Got it.

That's very helpful.

And then thinking about capital allocation at BrightView.

Obviously, there have been some priorities here that maybe got you into some non-core businesses and with some acquisitions that tend to scale the way that they were desired.

Just from like a metric standpoint, how are you sort of thinking about measuring success in capital allocation return on invested capital framework.

Is there anything sort of you thinking of how to measure success that maybe moves beyond consolidated measures that you guys discuss?

I think, you mentioned some of the challenges we have had is we have deployed capitals, and we haven't traditionally been great stewards of that capital as we have deployed it.

So, our M&A process that the first thing I did with the team and I am so happy with the progress we have made is tapped the brakes on M&A because, like I have said, M&A is not just a financial move.

It has to fit the company strategically and culturally, as much as just making the math work.

And even the process for integrating that M&A that we have done in the past.

When we buy a company, we have to own the company and be a better owner of that asset immediately.

We can't have earn-outs, we can't just let the asset linger out there for a period of time before they become part of the BrightView team.

So, our M&A process is going to drastically change, and our field operators are right now(inaudible), we have over $700 million of potential M&A.

And our group has reviewed it to say which one of these potential targets make the most sense for us to bring into our company that we can be a better owner and they can help us, if we can grow their revenue faster or drive more efficiency and create bottom line returns.

We haven't done that in the past, and that is a major shift for us.

I am a huge believer in M&A, but M&A has to be done the right way.

It can't be a financial calculation that nobody the understands the business and the people that work there actually are involved in the decisions.

So, it is changing and look, we have got to monitor M&A and how we are a better owner.

We have got to make sure post deals.

We know what improvements we are making to make more EBITDA and more revenue on the business that we acquire

Got it.

That's very helpful.

And then maybe to wrap up on.

Can you highlight any sort of tangible or intangible strategic assets that when you look at BrightView now from your sort of outside becoming an insider vintage.

You say these are true strategic and competitive assets that are distinct from our competitors and distinct in the market?

It's a great question and I would tell you what excites me most about this is the closer, I have visited, you know, not quite a third of our branches, but I have been spending most of my first 120 days out interacting with our frontline team.

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

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

We have to upgrade some of our fleet.

We have to get them better mowers.

We have to get them tools and training and safety equipment.

So, every day when they are out servicing our customers.

Our customers understand why we are the best provider in this industry.

That's why you heard from Brett, we are going to take those proceeds that we got from US Lawns.

We are going to reinvest that back in the business to make sure those frontline employees get the benefits that they deserve and they can service the customers.

And that's the most positive part of this business.

And yes, we had some different segments of our business that might have been a little siled with as we announced, we are integrating Golf and Tree.

But even those businesses have dedicated people that are experts in what they do.

But when we bring all the resources we have together and they all work seamlessly going to market to our customers, nobody can compete with BrightView.

We have experts from turf to development to tree care to irrigation to general land maintenance.

We have the best people in the industry, and I see that every day when I visit branches.

So, that is our secret sauce.

We just have to support those people, so they can spend more time doing what they do best every day

Thank you.

Thanks, Alex.

(Operator Instructions) Steffen [Meister], Jefferies.

Hello.

This is (inaudible) Yes, so developments are some particular strength in the business, but just wanted to get an idea of what are some of the drivers of the strength in the development business this year?

And do you expect this to be carried over throughout the rest of the year?

So, Harold, I think, you broke up a little bit, but our development business, obviously has been the benefactor of what the country's seen on the construction cycle over the last couple of years and some of those mega projects that you heard a lot of people talk about, as they come towards the end and will continue to come towards the end for the next year and a half.

We offer one of the top 50 specialized construction companies in North America that can actually support the final stages of those projects.

So, that team is very hit in the stride right now.

They have a great backlog.

We are winning new jobs every day, and we will continue to see that demand, as Brett said, well into 2025 as we continue to bid work.

So, that business has been a huge, huge benefactor of all the construction that's gone on over the last 24 months.

So, we are very optimistic about development.

Thank you.

And then, just on the EBITDA margin, how should we think about the cadence of EBITDA margins throughout the rest of the year for you to know that 40 to 80 basis points.

And you know, just any insight on that, on the cadence for the rest of the year would be helpful.

Thank you.

Yes, great.

Great question.

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

So, a little bit is just the timing of snow in Q1 and how that, what are but our guide would be then for the full year snow holding it to (inaudible) would imply that that's no shortfall in Q1 have come back in Q2 and therefore, we see that margin rebound here in Q2.

As you think about quarter to quarter, we are not again providing quarterly guidance.

But as we look at the full year, we feel strong sitting here today with some of the actions we have taken towards one BrightView and to align the business and the momentum we are seeing in the underlying core business and land and the momentum we are seeing in our development business and some of the cost structure changes we have made in corporate that for the full year guide, we feel confident in that 40 to 80 basis points total margin expansion for the business.

Thank you.

That's all my questions for today.

Thank you.

George Tong, Goldman Sachs.

Hi, thanks, good morning.

You have reiterated your full year guide, despite the sale of US Lawn and the shortfall in snow revenue in fiscal 1Q.

Can you elaborate on some of the assumptions around snow in the land business for the rest of the year that you are incorporating into your full year guide?

I think, George, great question.

Like reiterating our full guide, we also feel exactly where we felt after we have worked through January on snow with that range of 210 to 270 million snow.

So, we will update everybody where we finish once we get past the snow season.

But like I said earlier, where we sit today, we still feel that the guide we gave you will come in despite the shortfall we felt in Q1, but the activity we saw in January.

So snow, we feel good about.

And overall, with US Lawns, US Lawns was a strategic sale with $11 million of revenue at a double-digit multiple.

We got $52 million for.

So, you can do some quick math there.

We believe we can still step over that incremental three quarters of the EBITDA that business would have generated.

It's somewhat diminimus with the multiple we got.

So, we feel good about the momentum that we have as we go through the year.

So, we are not concerned that, that's going to have a negative effect either on revenue or on EBITDA for our full year guide overall.

Great, that's helpful.

And then development revenue growth of 6% came above your full year guide range of 2% to 5% for the segment.

Can you discuss your growth expectations for development for the rest of the year, any timing considerations or comp issues to be mindful of?

So, I will start with and I will let Brett.

Just at a high level, the one thing I would say, the benefit that or the fee, the lack of benefit we saw on snow that we told everybody we didn't see a lot of snow until January.

That means that the construction season can actually be running a little longer into the year.

So, our development group gets the benefit of that.

So, they did have an outstanding quarter with that growth.

And I would just say in Q2, depending on what we see for snow that could trim that down year-over-year, especially last year, like I said, snow in February and March was relatively light.

So, But Brett, do you want to add anything?

George, that typically development slowest quarters, Q2, same with our land business.

So, as you think about seasonality, and snow, et cetera.

Q2 is a bit lower.

If you think about last Q2, we were essentially flat in the business, just given timing of projects and seasonality.

So, we do still expect that side that full year revenue guidance of 2% to 5% for the year.

Q2 being a little bit Q1 and then as you look back in the back half of the year being right kind of in the middle that guide.

So, again, I feel bullish about that business.

We are essentially sold through 2024 and our backlogs were selling into 2025.

There could be some quarterly noise, just getting projects in the ground.

But at the end of the day, we feel great about that business and really the momentum in the overall company.

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

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

We really feel confident that getting EBITDA had a breakthrough year this year for the company.

It's where we are reaffirming and we feel optimistic about that.

Very helpful.

Thank you.

Thanks, George

This concludes our Q&A.

I will now hand back to Dale, CEO for closing remarks.

Thank you, operator.

As everyone can tell, we are very excited about the opportunities ahead, and I am 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, thank you, and operator, you may end the call.

Ladies and gentlemen, today's call is now concluded.

We would like to thank you for your participation.

You may now disconnect your lines.