BrightView Holdings, Inc. (NYSE: BV) · 2019-06-12 · snowplowing services as a share of the overall U.S. market at rates consistent with IBISWorld figures for 2017. • Stable growth

William Blair – 39th Annual Growth Stock Conference

June 6, 2019

Inspiring people.

Nurturing landscapes.

BrightView Holdings, Inc.(NYSE: BV)

Disclaimer

2

This presentation contains “forward looking statements” within the meaning of the safe harbor provision of the U.S. Private

Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. All statements, other than

statements of historical facts, contained in this presentation, including statements concerning our plans, objectives, goals, beliefs,

business strategies, future events, business conditions, results of operations, financial position, business outlook, business trends

and other information, may be forward-looking statements. The forward-looking statements are not historical facts, or guarantees

of future performance and are based upon our current expectations, beliefs, estimates and projections, and various assumptions,

many of which, by their nature, are inherently uncertain and beyond our control. You can identify these forward-looking statements

by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,”

“approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable

words. Our expectations, beliefs, and projections are expressed in good faith and we believe there is a reasonable basis for them.

However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved and actual

results may vary materially from what is expressed in or indicated by the forward-looking statements. The forward-looking

statements speak only as of the date of this presentation, and we undertake no obligation to publicly update or review any forward-

looking statement, whether as a result of new information, future developments or otherwise.

There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our

actual results to differ materially from the forward-looking statements contained in this presentation. Such risks, uncertainties and

other important factors that could cause actual results to differ include, among others, the risks, uncertainties and factors set forth

under the heading “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of

Operations” and elsewhere on our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”)

on November 28, 2018. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to

predict all risk factors and uncertainties. For a more complete description of risks and other uncertainties, please to refer to our

Annual Report on Form 10-K as well as to our subsequent filings with the SEC.

Included in this presentation are certain non-GAAP financial measures, such as Adjusted EBITDA, designed to supplement, and

not substitute, the Company’s financial information presented in accordance with generally accepted accounting principles in the

United States (“GAAP”) because management believes such measures are useful to investors. Additional information about these

measures and a reconciliation to the nearest GAAP financial measures is provided in the appendix to this presentation. We are not

providing a quantitative reconciliation of our financial outlook for Adjusted EBITDA to net income (loss), its corresponding GAAP

measure, because the GAAP measure that we exclude from our non-GAAP financial outlook is difficult to reliably predict or

estimate without unreasonable effort due to its dependence on future uncertainties. Additionally, information that is currently not

available to us could have a potentially unpredictable and potentially significant impact on our future GAAP financial results.

3

Today’s Presenters

• Joined BrightView in January 2016

• Prior to joining BrightView, John served as CFO of Trinseo

• While at Trinseo, he built a best-in-class financial organization leading the

company to a public offering in 2014

• He has also served as CFO for other publicly-traded and private equity backed

organizations including JMC Steel Company and HB Fuller

• B.A. degree in Business and Economics from St. Anselm College and an MBA

from the University of North Carolina, Chapel Hill

John Feenan, Executive VP and Chief Financial Officer

• Joined BrightView in December 2016

• Most recently served as Executive Vice President at Precision Castparts

• At Precision Castparts, Andrew also served as President of the Wyman Gordon

and Structural Casting divisions

• Prior to Precision Castparts, he was President and Chief Executive Officer of

North America for ESAB Group

• B.A. degree (with distinction) in Political Science from Colorado College and

advanced degrees in Engineering, Japanese and Business Administration from

the University of Michigan

Andrew Masterman, President and Chief Executive Officer

Cedars-Sinai Medical Center – Los Angeles, CA

Inspiring people. Nurturing landscapes.

Company Overview

5

BrightView: 70+ Years of Delivering

Best-in-Class Service

• Founded in 1939 by Theodore Brickman

• Primarily landscape maintenance and snow

removal services

• Strong national presence

• Founded in 1949 by Burton Sperber

• Provider of landscape maintenance and

development services

• Strong evergreen market presence

Founded in 2014

Industry-Defining,

Route-Based

Services

Company

Strong Local

Market Presence

and Brand

Reputation

Large, Highly-

Fragmented and

Stable

Addressable

Market

Consolidation

Strategy

Leveraging

Resources and

Scale

Operational

Improvements

Driving Strong

Margins

We Provide Holistic Solutions Across the Full

Spectrum of Maintenance & Development Services

1 FY2018 results represent operations during the 12ME 9/30/18.

Landscape Maintenance Landscape Development

FY’18

Revenue

$2.35B1

Revenues: $1.77B1

75% of Revenues

Revenues: $0.58B1

25% of Revenues

Business

Overview &

Highlights

• Commercial landscaping and snow removal services

• Need-based, essential services business

• Landscape architecture and development

services for new landscapes / large-scale

redesign projects

• Expands BrightView’s customer base

• Horticultural thought-leadership

• Complex and high-profile projects

• Many contracts include ongoing maintenance

upon project completion

Selected

Services Landscape

Services

Snow

Services

Tree Care

Services

Sweep

Services Irrigation Fertilization

Disaster

Recovery

Landscape

Architecture

Nursery &

Tree Moving Pool & Water Sports Fields

Selected

Customers

6

Commercial Landscaping

• Non-discretionary service

• Predictable recurring revenue

model

• Broad offering of ancillary

services

Snow Removal

• Counter-seasonal revenue stream

• Utilizes existing infrastructure

• Year-to-year variability,

modulated around 30-year avg.

snowfall rates

7

And Offer a Highly Compelling Value

Proposition to our Customers

Local Market

Presence

Deep local market knowledge

“Strategic partnership” mentality

Professional, empowered and accountable branch managers

Differentiated training and retention of branch staff

Consistent, high-quality execution

Lower organizational sophistication

Lower consistency of service and quality

Higher employee / crew turnover

Breadth of

Service Offerings

Able to serve virtually any customer need

Expertise in highly technical and complex services

Deep horticultural knowledge base

Ability to self-perform majority of work

Mostly offering basic services

Lacking in depth / horticultural expertise

Customers forced to manage multiple

vendors

Professional

Operating Platform

Highly trained, collegiate and masters graduates with deep

horticultural knowledge base and field experience

Best-in-class technology and equipment

Comprehensive compliance and safety management programs

Sophisticated centralized ERP systems

Smaller scale limits resources to invest in

advanced technological infrastructure

Less developed Human Resources policies

and practices

Limited employee career opportunities

National

Scale

Fully invested, national platform capable of serving customers

across multiple geographies while executing locally

Institutionalized best-practices

Escalation path for local issues to drive collaborative solutions

Significant resources to support local branch operations

Inability to deliver services nationally

Informal or inexistent process for sharing

and implementation of best-practices

Limited resources dedicated to support and

foster employee development

Average Local Competitor

#1 Player in a ~$67B Market

~10xNext Largest Competitor

Strong Margins and Free

Cash Flow ~80% Cash Conversion

Modest Capex Needs~2.5% of Revenue

Robust M&A Pipeline13 companies and more than

$250 million in revenue acquired

since 1/1/17

Our Breadth of Coverage Enables Us to

Serve Customers Across the Country

National Footprint

States with BrightView Branches

Extended Coverage via Qualified Service Partners

Maintenance Location

Development Location

Branches Employees

Evergreen ~65% ~75%

Seasonal ~35% ~25%

Total > 200 ~ 20,000

Key Statistics

by Region

8

Consistent Execution of Complex

Maintenance and Development Engagements

9

Pavilion Park

Irvine, CABeacon Park

Irvine, CA

Marlins Park

Miami, FL

ExxonMobil Headquarters

Irving, TX

Getty Museum

Los Angeles, CA

Duke University

Durham, NC

Four Seasons Hualalai

Kona, HI

Ritz Carlton

Key Biscayne, FL

Colonial Williamsburg

Williamsburg, VA

Toyota North American Headquarters – Plano, TX

Industry & Business Model Highlights

Sustainable Future Growth Levers

11

LEVERS FOR FUTURE GROWTH

GROW WALLET SHARE

WITH EXISTING

CUSTOMERS

Infrastructure and Technology

in place to expand existing relationships

EXPAND

CUSTOMER

BASE

Capitalize on Multiple Channels

to win new business

DRIVE

OPERATIONAL

ENHANCEMENTS

Center of Excellence

initiatives driving meaningful cost reduction

EXECUTE

ACCRETIVE M&A

OPPORTUNITIES

Commitment to implementing our proven

“Strong-on-Strong” strategy

~10x

The Size of Next

Largest Direct

Competitor

Industry Leader

Across a Number of

Service Lines

Differentiated Scale

in a Highly-

Fragmented Market Serves 4 of the 5

Largest U.S. Banks4

Contracts with 4 of the 5

Largest U.S. Companies5

Serves 9 of the Top 10 3rd Party

Hotel Management Firms

Serves 11 of the Top 15

Health Systems

Scope to Service a

Diverse Set of End

Markets ~13,000 Office Buildings /

Corporate Campuses

9,000 Residential

Communities

~3,400 Shopping

Environments

450+ Education

Institutions

High-Profile

Bespoke

Assignments Turf Restoration for

the National Mall

Maintenance for Colonial

Williamsburg

Official Field Consultant

for Major League Baseball

Designed / Built Fields for

3 Olympic Games

#1 Commercial

Landscaper in the U.S.

#1 Snow Removal

Company in the U.S.2Leading

Tree Nursery3

Leading Provider of Golf

Course Maintenance3

Leading Water Irrigation

Service Provider3

#1 Provider of Commercial Landscaping Services…

Top 10 North American Landscaping Companies1

12

~10x

1 Per Lawn and Landscape magazine and company press releases, based on 2017 revenue. Excludes tree care focused companies. 2 Per Snow Magazine. 3 Per Management estimates. 4 Ranking based on total publicly reported assets. 5 Per Forbes, based on total revenues.

…In a Large, Growing and Highly-Fragmented

Commercial Landscaping Industry

1 Landscaping services in the U.S. (2006-2017), IBISWorld – Snowplowing Services in the U.S. (2014, 2016-2017) presents commercial landscaping services and commercial

snowplowing services as a share of the overall U.S. market at rates consistent with IBISWorld figures for 2017.

• Stable growth due to non-discretionary nature of

service

• Resilient revenue from focus on industry’s Top Quartile

• BrightView is the only company with >1% market share

• Growth supported by outsourcing and procurement

centralization trends

• Quality demands drive engagement complexity and

criticality of execution

~$67BU.S. Commercial

Landscaping and Snow

BrightView: ~$1.77B

Market Share: 2.7%

~$52BU.S. Commercial

Landscaping

Services

MARKET OPPORTUNITY

13

Commercial Landscaping and Snow Removal Services:

Steadily Growing Industry ($B)1

$46 $48 $47 $44 $45 $46 $50 $53

$58 $61 $65 $65 $67 $68 $69 $69 $70 $71

'06A '07A '08A '09A '10A '11A '12A '13A '14A '15A '16A '17A '18E '19E '20E '21E '22E '23E

CAGR: 0%

$5.57 $5.32

$2.14 $2.15 $1.68

$0.58 $0.24

Fixed Taxes Utilities R&M Cleaning Parking Grounds

Topline Benefits from High Retention, Limited

Concentration and Low Relative Cost of Service

Recurring

Maintenance

Services

Anchor business that provides

predictable recurring revenue and

high degree of visibility on future

performance (75% of FY2018 revenue)

Evergreen

Sites

Significant presence in evergreen

regions, which require year-round

maintenance

Limited

Customer Concentration¹

12%

88%

Top 10

Customers

All Other

Customers

1 Reflects BrightView’s customer concentration based upon FY2018 revenue contribution.2 Other includes: Hospitality, Hospitals, Education, Public Spaces and Other sectors.3 Building Owners and Managers Association International estimate of 2018 average operating expenses per square foot.

Private Sector Office Building Expenses ($/sq.ft.)3

14

Stability of Business Model Amplified by Relative Low Cost of

Landscaping Services

Nature

of Services…

No Customer >3%

40%

25%

35%

Other 2

HOA Corporate

Diversified

Customer Base1

Snow Services: Valuable Source of Counter-

Seasonal Revenue and Employee Retention

Efficient utilization of existing assets

High value-add to customers (combination with landscape)

Balanced mix of fixed price contracts with guaranteed

minimums (reduce year-to-year volatility) and upside from

pay-per-plow contracts

Additional tool for employee retention given year-round

demand

U.S. Snowfall Amounts Modulate Around 10- and 30-Year Averages¹

1 Reflects cumulative annual snowfall at locations where BrightView has a presence. 2019 is fiscal year to date.

Inherent Benefits of Snow Services Offering

Avgs. as of 3/31/19

10-Yr. 2,741”

30-Yr. 2,590”

15

2017

2018

2019

Analyzing a Robust M&A Pipeline to Support Future Growth

16

Strong-on-Strong Acquisition Strategy

4,500+Additional

customer sites

$250M+Annualized revenue

since Jan 1, 2017

Note: Quarters represent BrightView’s fiscal quarters for FYE 30-Sep.

Anaheim, CA

Vista, CA

Sanford, FL

Dallas, TX

Danville, CA

Bay Area, CA

Austin, TX

South Florida

Phoenix, AZ

Hartford, CT

Tucson, AZ

Shamong, NJPortland, OR

The Leading Acquirer of Commercial Landscaping Businesses

Strategic Objectives

Increase Density

Develop Underpenetrated Geographies

Expand Landscape Enhancement Business

Improve Technical Capabilities

Andrew Masterman

President and Chief Executive Officer

John Feenan

EVP, Chief Financial Officer

Jeff Herold

President, Landscape Maintenance

Tom Donnelly

President, Landscape Development

Brian Bruce

EVP, Chief Information Officer

Todd Chambers

EVP, Chief Marketing Officer

Jonathan Gottsegen

EVP, Chief Legal Officer

Long-Tenured and Experienced Leadership Teams

Proven Management and Experienced

Local Leadership Teams

Senior Leadership Team

Position Number of

Employees

Avg. BrightView

Tenure (yrs.)¹

Senior Vice

President15 19

Vice President 35 17

General Manager 12 16

Branch Manager 208 13

Assistant Branch

Manager62 11

Account

Manager724 8

1 As of 9/30/18 and including tenure with companies acquired by BrightView.

Brightview Management Combines Extensive Business Services

Experience with Robust Local Landscaping Leadership

17

Local Leadership Team

Los Angeles County Museum of Art – Los Angeles, CA

Financial Highlights

Record Results in Fiscal Year 2018

19

• Record Total Revenue

• Record Adjusted EBITDA

• Record Adjusted EBITDA margin

• Record Cash Flow Generation

Revenue∆ YoY

$2,353.6M

Up 5.7%

Adj. EBITDA Margin∆ YoY (bps)

12.8%

Up 80 bps

Adj. EBITDA∆ YoY

$300.1M

Up 12.6%

• Maintenance Services

Revenue $1,774.8M – up 7.4%

Adj. EBITDA $289.8M – up 12.3%

• Development Services

Revenue $583.3M – up 1.1%

Adj. EBITDA $78.7M – up 1.7%

FY2019 Financial Guidance1

20

Full Year 2019 Assumption

• Acquisitions: expected to contribute at least $75 million to fiscal 2019 revenue

• EBITDA Margin: expected to be 10 to 30 basis points higher versus full year fiscal 2018

• Net Debt / Adjusted EBITDA ratio: expected to approach 3.5x by the end of fiscal 2019

Total Revenue Adjusted EBITDA Net Capital Expenditures

$2,400M - $2,470MPredictable Drivers

$310M - $318MProfitable Growth

~2.5% of RevenueLong-Term Average

1Our financial guidance contains forward-looking statements and is subject to risks and uncertainties. See “Introductory Information”.

2Q FY2019 Revenue

21

(Numbers $M) 2Q19 2Q18 Commentary

Total Revenue $596.6 $590.4

• 1.1% Increase

• (+) Maintenance Revenue

• (-) Development Revenue

Maintenance Services $473.3 $460.1

• 2.9% Increase

• (+) Acquisitions

• (-) Managed Exits

Development Services $124.0 $131.0

• (5.4%) Decrease

• (+) New projects and acquisitions

• (-) Large project comps and weather delays

2Q FY2019 Adjusted EBITDA

22

(Numbers $M) 2Q19 2Q18 Commentary

Total Adj. EBITDA $61.1 $51.6

• 18.4% Increase

• 10.2% Adjusted EBITDA margin

• 150 basis point expansion

Maintenance Services $65.0 $58.3

• 11.5% Increase


• 100 basis point expansion

Development Services $11.0 $12.9

• (14.3%) Decrease


• 90 basis point contraction

Corporate Segment ($14.9) ($19.5)

• 23.8% Decrease

• Timing of public company expenses in the

prior-year quarter

• Maintenance Services Segment

– Continued focus on efficiencies

– Benefit of Managed Exits from small and/or low-profitability accounts

• Development Services Segment

– Comparison with wind-down of large projects included in 2Q18 results

• Corporate Segment

– 2Q18 included certain non-recurring expenses related to becoming a public company

Focusing on Debt Reduction and Cash Generation in 2nd Half 2019

Capital Expenditures and Net Debt

23

Net CapEx / Total Revenue:

1.8% in 1H18 vs. 3.5% in 1H19

Expect Full-Year Fiscal 2019

around 2.5%

Net Debt / Adjusted EBITDA

4.1x at 1Q19 vs. 4.0x at 2Q19

Expect to be around 3.5x

at FYE ’19

Capital

Expenditures Net Debt

$1,161.4 $1,174.1

Dec. 31, '18 Mar. 31, '19

3

$21.0 Net

Capex

$39.6 Net

Capex

$1.5$3.0

1H18 1H19

$44.1$42.6

$21.6

1

1

Asset Disposals

1 Net capital expenditures excludes the acquisition of legacy ValleyCrest land and buildings for $21.6mm in 1Q18 and is net of proceeds from sale of property & equipment.2Total Financial Debt includes total long-term debt, net of original issue discount, and capital lease obligations 3Total Net Financial Debt (“Net Debt”) equals Total Financial Debt minus Total Cash & Equivalents

Legacy

Assets

(Numbers $M) 1Q19 2Q19

Total Financial

Debt2 $1,179.1 $1,185.3

Total Cash and

Equivalents$17.7 $11.2

Net Financial

Debt3 $1,161.4 $1,174.1

Net Debt / LTM

Adj. EBITDA4.1x 4.0x

Rose Fitzgerald Kennedy Greenway – Boston, MA

Thank You

Agnes Scott College – Atlanta, GA

Appendix – 2Q19 Non-GAAP ReconciliationsFull Year 2018 Results & Non-GAAP Reconciliations

Non-GAAP to GAAP Reconciliation

26

(*) Amounts may not total due to rounding.

(in millions)* 2019 2018 2019 2018

Adjusted EBITDA

Net loss (3.6)$ (22.1)$ (12.4)$ (2.7)$

Plus:

Interest expense, net 18.9 25.1 36.1 50.0

Income tax benefit (1.3) (7.9) (4.5) (59.4)

Depreciation expense 21.7 17.7 41.0 38.8

Amortization expense 13.8 29.3 28.9 60.4

Establish public company financial reporting compliance (a) 1.3 0.2 1.7 2.8

Business transformation and integration costs (b) 4.7 2.1 8.9 18.9

Expenses related to initial public offering (c) — 2.1 — 2.1

Equity-based compensation (d) 5.6 4.3 11.5 5.8

Management fees (e) — 0.7 — 1.3

Adjusted EBITDA 61.1$ 51.6$ 111.2$ 118.0$

Six Months Ended

March 31,

Three Months Ended

March 31,

Non-GAAP to GAAP Reconciliation (Con’t)

27


(in millions)* 2019 2018 2019 2018

Adjusted Net Income

Net loss (3.6)$ (22.1)$ (12.4)$ (2.7)$

Plus:


Establish public company financial reporting compliance (a) 1.3 0.2 1.7 2.8


Expenses related to initial public offering (c) — 2.1 — 2.1

Equity-based compensation (d) 5.6 4.3 11.5 5.8

Management fees (e) — 0.7 — 1.3

Income tax adjustment (f) (6.2) (9.1) (12.6) (67.7)

Adjusted Net Income 15.6$ 7.6$ 26.0$ 21.0$

Free Cash Flow and

Adjusted Free Cash Flow

Cash flows from operating activities 58.3$ (3.3)$ 64.7$ 79.2$

Minus:

Capital expenditures 25.3 14.3 42.6 44.1

Plus:

Proceeds from sale of property and equipment 1.2 0.8 3.0 1.5

Free Cash Flow 34.2$ (16.8)$ 25.1$ 36.6$

Plus:

ValleyCrest land and building acquisition (g) — — — 21.6

Adjusted Free Cash Flow 34.2$ (16.8)$ 25.1$ 58.2$

Six Months Ended

March 31,

Three Months Ended

March 31,


Non-GAAP to GAAP Reconciliation (Con’t)

28

(a) Represents costs incurred to establish public company financial reporting compliance, including costs to comply with the requirements of Sarbanes-Oxley and

the accelerated adoption of the new revenue recognition standard (ASU 2014-09 – Revenue from Contracts with Customers), and other miscellaneous costs.

(b) Business transformation and integration costs consist of (i) severance and related costs; (ii) vehicle fleet rebranding costs; (iii) business integration costs and (iv)

information technology infrastructure transformation costs and other.

(c) Represents expenses incurred for the IPO.

(d) Represents equity-based compensation expense recognized for equity incentive plans outstanding, including $3.1 and $7.0 million related to the IPO in the three

and six months ended March 31, 2019, respectively.

(e) Represents fees paid pursuant to a monitoring agreement terminated on July 2, 2018 in connection with the completion of our IPO.

(f) Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a

reduction of income tax. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the jurisdiction that was

impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include changes in laws or

rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances. The six months ended March 31, 2018 amount includes a $41.4

million benefit recognized as a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act.

(g) Represents the acquisition of legacy ValleyCrest land and buildings in October 2017.

Fiscal Year 2018 Non-GAAP Reconciliations –

Adj. EBITDA

29


Three Months Ended September 30,

Twelve Months Ended

September 30,

(in millions)* 2018 2017 2018 2017

Adjusted EBITDA

Net loss $ (10.9 ) $ 0.4 $ (15.1 ) $ (37.4 )

Plus:

Interest expense, net 20.3 24.7 97.8 98.1

Income tax benefit (8.1 ) (2.0 ) (66.2 ) (24.0 )

Depreciation expense 18.7 17.0 75.3 77.7


Establish public company financial reporting compliance (a) 0.8 — 4.1 2.3


Expenses related to initial public offering (c) — — 6.8 —

Debt extinguishment (d) 25.1 — 25.1 —

Equity-based compensation (e) 8.0 0.3 28.8 2.9

Management fees (f) 11.0 0.6 13.1 2.6

Adjusted EBITDA $ 84.2 $ 79.7 $ 300.1 $ 266.6


Adj. Net Income and Adj. Free Cash Flow

30


Three Months Ended September 30,

Twelve Months Ended

September 30,

(in millions)* 2018 2017 2018 2017

Adjusted Net Income

Net loss $ (10.9 ) $ 0.4 (15.1 ) $ (37.4 )

Plus:


Establish public company financial reporting compliance (a) 0.8 — 4.1 2.3


Expenses related to initial public offering (c) — — 6.8 —

Debt extinguishment (d) 25.1 — 25.1 —

Equity-based compensation (e) 8.0 0.3 28.8 2.9

Management fees (f) 11.0 0.6 13.1 2.6

Income tax adjustment (g) (17.5 ) (16.0 ) (103.1 ) (56.7 )

Adjusted Net Income $ 35.8 $ 24.2 $ 90.0 $ 58.1

Free Cash Flow and Adjusted Free Cash Flow

Cash flows from operating activities $ 56.7 $ 55.3 $ 180.4 $ 124.2

Minus:

Capital expenditures 14.7 9.9 86.4 60.9

Plus:

Proceeds from sale of property and equipment 8.0 1.7 12.0 7.0

Free Cash Flow $ 50.1 $ 47.1 $ 105.9 $ 70.4

Plus:

ValleyCrest land and building acquisition (h) — — 21.6 —

Adjusted Free Cash Flow $ 50.1 $ 47.1 $ 127.6 $ 70.4


Footnotes

31(*) Amounts may not total due to rounding.

(a) Represents costs incurred to establish public company financial reporting compliance, including costs to comply with the requirements of Sarbanes-Oxley and the accelerated adoption of the new revenue recognition standard (ASC 606 – Revenue from Contracts with Customers), and other miscellaneous costs.

(b) Business transformation and integration costs consist of (i) severance and related costs; (ii) vehicle fleet rebranding costs; (iii) business integration costs and (iv) information technology infrastructure transformation costs and other.

Three Months Ended

September 30,

Twelve Months Ended

September 30,

(in millions)* 2018 2017 2018 2017

Severance and related costs $ 2.5 $ 0.8 $ 5.7 $ 6.9

Rebranding of vehicle fleet 0.1 5.6 12.5 6.3

Business integration 1.3 — 1.7 0.6

IT Infrastructure transformation and other 0.1 1.5 5.5 4.9

Business transformation and integration costs $ 4.0 $ 7.9 $ 25.4 $ 18.7

(c) Represents expenses incurred in connection with the IPO.

(d) Represents losses on the extinguishment of debt.

(e) Represents equity-based compensation expense recognized for equity incentive plans outstanding, including $19.6 million related to the IPO in the twelve months ended September 30, 2018.

(f) Represents fees paid pursuant to a monitoring agreement terminated on July 2, 2018 in connection with the completion of the IPO.

(g) Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a reduction of income tax. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include changes in laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances. The twelve months ended September 30, 2018 amount includes a $43.4 million benefit recognized as a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the U.S. Tax Cuts and Jobs Act.

Three Months Ended

September 30,

Twelve Months Ended

September 30,

(in millions)* 2018 2017 2018 2017

Tax impact of pre-tax income adjustments $ 16.1 $ 14.3 $ 59.6 $ 55.3

Discrete tax items 1.4 1.7 43.5 1.4

Income tax adjustment $ 17.5 $ 16.0 $ 103.1 $ 56.7

(h) Represents the acquisition of legacy ValleyCrest land and buildings in October 2017.

Investor Relations Contact:

Daniel SchleinigerVP, Investor Relations

484.567.7148

[email protected]

Media Contact:

Fred JacobsVP, Communications & Public Affairs

484.567.7244

[email protected]

BrightView Holdings, Inc.

investor.brightview.com

mailto:[email protected]

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BrightView Holdings, Inc. (NYSE: BV) · 2019-06-12 · snowplowing services as a share of the overall U.S. market at rates consistent with IBISWorld figures for 2017. • Stable growth