BrightView Holdings, Inc. Q3 FY2025 earnings call

• Progress executing One BrightView strategy with highest-ever adjusted EBITDA and margin. Trailing 12-month EBITDA up 15% in 7 quarters. - Frontline turnover reduced by over 40% in 21 months, leading to savings reinvested in service levels, fleet, and benefits. - Customer retention at ~82%, up 190 basis points trailing 12-month and 300 basis points since fiscal 2023. - Maintenance and development collaboration driving cross-selling, aiming for 70% conversions. - Invested over $250 million in capital over 2 years to refresh fleet, reducing equipment age and improving employee satisfaction, customer service, and brand reputation. - Centralized procurement function to drive cost efficiencies, e.g., saving 50% on safety gloves spend. - Deploying new IT platforms for HR and field service management to better manage employees and labor costs.

Total revenue for the third quarter was $708 million. Adjusted EBITDA for the third quarter was $113 million, an increase of $5 million or 5% higher versus the prior year period. Trailing 12-month EBITDA is $344 million, a $45 million or 15% improvement in 7 quarters. Maintenance and development teams collaborate to drive conversions of development work into reoccurring maintenance contracts, with potential for approximately 70% conversions leading to a $50 million-plus annual reoccurring maintenance opportunity. Development backlog grew by $14 million during the quarter, and there are plans to open 10 new development branches over the next 24 months.

• Reaffirm full-year guidance: expect record EBITDA and margins, revenue range $2.68 billion to $2.73 billion, free cash flow range $60 million to $75 million. - Continue to invest in fleet strategy, leveraging tax savings to accelerate fleet refresh. - Net leverage at end of third quarter was 2.3x, driven by lower debt levels, improved profitability, and liquidity.

• Macro-related dynamics causing delays in maintenance discretionary spending and development projects. - Development schedule delays, though timing related. - Labor market trends and potential impact on labor costs and availability.

Q: Tim Mulrooney asked about organic decline in land maintenance business and per occurrence work.

A: Dale Asplund said it was discretionary spend, with headwinds behind us and improvement starting in Q4. Brett Urban added about discretionary spend rebounding in early Q4.

Q: Bob Labick asked about sales force growth and new business.

A: Dale Asplund said sales force has grown by ~6%, with new sales reps taking 90 days to 12 months to produce revenue. Brett Urban mentioned rebalancing SG&A to invest in sales.

Q: Greg Palm asked about cost structure and SG&A savings.

A: Dale Asplund said centralization, fleet, and procurement are key drivers. Brett Urban added about One BrightView initiatives unlocking size and scale benefits.

Q: Toni Kaplan asked about customer end markets and AI.

A: Dale Asplund mentioned market drivers of headwinds and investing in IT platforms for better data management and customer retention.

Q: Jeffrey Stevenson asked about development delays and margin benefits.

A: Dale Asplund said development delays were timing related, and margin benefits from One BrightView initiatives would continue. Brett Urban added about opening new development branches for future growth.

Q: Stephanie Moore asked about labor trends.

A: Dale Asplund and Brett Urban discussed labor cost savings from reduced turnover, reinvestment in frontline employees, and labor cost trends.