BrightView Holdings, Inc. (BV) Earnings Call Transcript & Summary

Hello, and welcome to the 2022 BrightView Annual Meeting of Stockholders. Please note that this meeting is being recorded. Questions may be submitted via the Message icon at the top of your screen, typing your message and clicking the Send icon to the right of the message box. It is my pleasure to now turn the meeting over to BrightView's Chairman, Paul Raether. Mr. Raether, the floor is yours.

Thank you. Good morning, everyone. I'm Paul Raether, Chairman of the Board of BrightView, and I hereby call this meeting to order. I want to welcome you to the 2022 Annual Meeting of Stockholders. I will serve as Chairman; and Jonathan Gottsegen, the company's Chief Legal Officer and Corporate Secretary, will serve as Secretary. In addition to the meeting notice circulated with the proxy, a copy of the meeting agenda, along with the rules of conduct, are posted on the virtual platform. If at any time during the meeting you encounter any technical difficulties, please call the technical support number that was posted on the virtual meeting login page. Technical support will be available until this meeting is finished. At this time, I would like to introduce Andrew Masterman, our President and Chief Executive Officer and a member of the Board. We also have the other members of the Board standing for reelection, participating virtually with us today. I would like to introduce: Jim Abrahamson, Jane Bomba, Frank Lopez, Rich Roedel, Mara Swan and Josh Weisenbeck. Additionally, Andrew and I are also standing for reelection to the Board of Directors. I also want to recognize Mark Slavin and Rob Grasso of Deloitte & Touche, our independent auditors, who will be available during the question-and-answer session to address any questions you may have. And finally, Erica Mackey of American Stock Transfer & Trust Co, our transfer agent, has been designated to act as Inspector of Elections. Thank you, Erica. As of January 12, 2022, the record date, the total number of issued and outstanding shares of common stock of the company entitled to vote at this meeting was 105,258,550 shares. Under our bylaws, the holders of a majority of shares entitled to vote constitutes a quorum. The Inspector has determined that. Based on the number of shares represented at the meeting, a quorum is present. Therefore, this meeting is duly constituted. As you will see from our proxy statement and the meeting agenda, there are 3 proposals to be voted on today. Proposal #1, the election of 8 directors. Proposal #2, the approval in a nonbinding advisory vote of the compensation paid to our named executive officers. And Proposal #3, ratification of the appointment of Deloitte & Touche, our independent registered public accounting firm, for fiscal 2022. A question-and-comment period elected -- limited to these proposals will follow the presentation of the agenda items. You will be able to submit questions live during this meeting by submitting the questions through the messaging tab on your screen. We will answer questions relevant to meeting matters and that otherwise comply with the meeting rules of conduct. Following that question and comment period, there will be voting on all agenda matters. Once the formal business of this meeting is completed, we will open the floor for remarks by Andrew, to be followed by a general question-and-answer session. During the general question-and-answer session, you'll be able to submit questions live through the same messaging tab. I will ask you to please hold any questions unrelated to the agenda until the general question-and-answer session. The first proposal is the election to the board of 8 directors as more fully described in Proposal #1. The nominees named in the proxy are Jim Abrahamson, Jane Bomba, Frank Lopez, Andrew Masterman, Paul Raether, Rich Roedel, Mara Swan and Josh Weisenbeck. Any other nominations for director were required to have been submitted in proper written form on a timely basis to the Secretary as more fully described in our bylaws. Having received no other such nomination, the nomination process is closed. Under our bylaws, all of our directors are elected by a plurality of votes cast for a period of 1 year. Our Board recommends that you vote for the election of each of the directors nominated named above. The second proposal is to approve, on a nonbinding advisory vote, the compensation to be paid to the named executive officers. While the results of the vote are nonbinding and advisory in nature, the Board intends to consider the results of this vote. Our Board recommends that you vote for the approval of the compensation paid to our named executive officers. The third and final proposal is to ratify the appointment of Deloitte & Touche, our independent registered public accounting firm, for the fiscal year ending September 30, 2022. Our Audit Committee, which is charged with this responsibility under its charter, has repointed Deloitte & Touche, subject to stockholder ratification. Our Board, upon the recommendation of the Audit Committee, recommends that you vote for this proposal. This completes the presentation of the agenda items. The floor is now open for questions or comments related to the 3 proposals that I just discussed. Any stockholder wishing to submit a question live should submit their questions through the messaging tab. The meeting Secretary will then read aloud any questions related to the agenda. Jonathan, have you received any questions related to the agenda items.

Paul, I'm not seeing any questions related to the 3 agenda items, and we may continue.

Thank you. We will now vote on the proposals before the meeting. Please note that you must be a holder of record or hold a valid proxy form -- hold a valid proxy from the holder of record to vote at this meeting. If you have already voted and do not wish to change your vote, there is no need to vote again at this time. If you have not yet voted, or do wish to change your previously submitted vote, you may vote your shares online now by clicking on the "Proxy Voting" link on the left side of your screen. Please note that if you vote now after voting previously, only your last proxy vote will actually be tabulated. All right. I now declare the polls for each matter to be voted on at this meeting open as of this time, 11:10 Eastern Time today. Please vote your shares online now by following the on-screen voting instructions. We will close the polls momentarily. [Voting]

That should have given everyone enough time. So I now declare the polls closed. And the voting results on today's proposals will be as previously tabulated by the Inspector from proxies given prior to this meeting. We will now pause again while the Inspector of Elections retabulates the results to add the online voting that have been submitted at this meeting to the tabulation previously done by the Inspector from proxies given prior to this meeting. I will now ask Jonathan to report on today's voting.

Thank you, Paul. Based on the preliminary results reported by the Inspector of Elections, it appears that the stockholders have voted to elect by a plurality of votes cast each of the 8 director nominees named in the proxy statement to hold office until the 2023 Annual Meeting and until his or her successor is duly elected and qualified. With respect to the second proposal, it appears that the stockholders have voted to approve the compensation paid to our named executive officers. And with respect to the third proposal, it appears that the stockholders have voted to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm.

Thank you, Jonathan. The results reported today are preliminary. The final tally remains subject to certification by the Inspector of Elections and will be provided in a Form 8-K that will be filed by the company with the SEC. With this formal portion of the meeting now concluded, I declare this meeting adjourned. We would like now to proceed with an update from Andrew Masterman, our CEO, followed by a general question-and-answer session. You will be able to submit your questions live during the general question-and-answer session through the messaging tab. Andrew, the floor is now yours.

Thank you, Paul, and welcome, everyone. I should start by saying that the BrightView team has amazed me every day with their resilience and fortitude. I could not be prouder of every single one of our 20,000 team members who have continued to serve our clients with excellence. BrightView is built on an 80-year legacy of providing best-in-class landscape services. And just as our predecessor companies persevered through multiple macroeconomic disruptions while continuing to deliver significant value to our customers, so will BrightView. We continue to experience pandemic business impacts, specifically related to labor, inflation and material costs. But the fundamentals of our business and industry remain strong. To summarize our 2021 performance, total revenue for the company was a record $2.55 billion. Maintenance segment revenue was $1.98 billion, with our expansion driven by continued growth in our contract-based business as well as a rebound in ancillary services penetration. In the Development segment, we achieved revenue of $574.9 million. And for the year, total company adjusted EBITDA increased to $302.3 million. And adjusted EPS increased approximately 32% to $1.20 per share, a record for the company. Our consistent and predictable free cash flow generation continues to be robust. We generated $96.7 million of free cash flow during the fiscal year. The results of our Strong-on-Strong acquisition strategy continue to benefit our revenue growth. And with an attractive $600 million pipeline, acquisitions will continue to be a reliable and sustainable source of growth. Our business is cash generative with low capital intensity, allowing us to consolidate the marketplace in an efficient and disciplined manner we have shown to be repeatable. For fiscal 2022, we have identified target MSAs that present us with plentiful accretive opportunities to expand in new and existing high-growth housing markets. We also continue to be leaders in environmental, social and corporate governance, or ESG. BrightView's commitment to the core principles of ESG is a source of pride for every member of our team. Notable among these efforts is that, first of all, we now have a majority independent Board, and every member of our -- of each Board committee is considered independent. Second, we continue to provide diversity, education and training and have established 2 employee resource groups to promote inclusion and engagement. And third, team member safety remains a top priority with our injury rate -- as our injury rate is significantly below the industry average. And fourth, we released our first annual ESG report this year and expect to be approximately 75% carbon-neutral by 2030 and 100% carbon-neutral by 2035. Fiscal year 2021 was an extraordinary year by any measure, and what our team accomplished in the face of the pandemic is simply amazing. I'd also like to personally thank every member of our dedicated teams. To all our gardeners, account managers, business developers and branch leadership, thank you. Also, thank you to all BrightView customers and partners for your resiliency and commitment during a challenging time. With that, I'll conclude my remarks, and we'll move right to your questions. Paul?

Thank you, Andrew. We'll now proceed to the general question-and-answer session. You'll be able to submit questions live during this general question-and-answer session through the messaging tab. All questions should be addressed to the meeting Secretary. And if appropriate, he will read the questions aloud and refer them to the appropriate response -- responder for response. Jonathan, have we received any questions for the general question-and-answer session?

Paul, just giving it another second or 2. I'm not getting any questions. So we may proceed.

Thank you, and thank you all for your support and for attending our annual meeting. We are now adjourned, and you may disconnect.