BrightView...2020/04/07 · The forward-looking statements contained in this presentation reflect...
Transcript of BrightView...2020/04/07 · The forward-looking statements contained in this presentation reflect...
BrightViewBusiness Update in Response to the Coronavirus (COVID-19)
April 7, 2020
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This presentation contains forward looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this presentation, including
statements regarding our industry, strategy, future operations, future liquidity and financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking
statements. The words “outlook,” “guidance,” “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” or similar expressions are intended to identify forward-
looking statements, although not all forward-looking statements contain these identifying words. By their nature, forward-looking statements: speak only as of the date they are made; are not statements of
historical fact or guarantees of future performance; and are subject to risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. 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 contained in this presentation reflect our current
views with respect to future events, and we assume no obligation to update any forward-looking statements.
Factors that could cause actual results to differ materially from those projected include, but are not limited to: the duration and extent of the novel coronavirus (COVID-19) pandemic and the impact of
federal, state, and local governmental actions and customer behavior in response to the pandemic and such governmental actions; the risk that our Maintenance and Development operations may be
deemed not to be an essential business or service in jurisdictions where we operate; customer cancellations or delays of work; any adverse impact on the timing and collectability of payments to us from
customers as a result of the impact of COVID-19 on them; operational disruptions if a significant percentage of our workforce is unable to work or we experience labor shortages, including because of
illness or travel or government restrictions in connection with the COVID-19 pandemic and delays in H2-B visa processing; general business, 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, including regulatory costs, claims and litigation related to the use of chemicals and pesticides by employees and
related third-party claims; 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 governing our variable rate indebtedness increasing the cost of servicing our substantial
indebtedness including proposed changes to LIBOR; and counterparty credit worthiness risk or risk of non-performance with respect to derivative financial instruments.
Additional factors that could cause our 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, 2019 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.
Forward Looking Statements
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HEALTH AND SAFETY
• Keeping our employees, their families and our customers safe is our number one operating principle
• Activated field and corporate working groups early and continue to apply learnings
• Our thoughts go out to all who have been affected by the coronavirus (COVID-19), as well as the dedicated healthcare
workers and first responders who are on the front lines battling this pandemic
EXECUTION AND BUSINESS CONTINUITY
• Landscaping recognized as essential service
• Executing downturn playbook and implementing prudent actions to preserve cash
CAPITAL STRUCTURE AND LIQUIDIITY
• We have a strong and flexible balance sheet and ample liquidity
• We have multiple levers to continue to preserve capital
LIVING OUR PURPOSE
• BrightView is the largest provider of commercial landscaping services in the United States
• Our team of approximately 21,500 employees provides services ranging from landscape maintenance and enhancement
to tree care and landscape development
• Serving our customers and caring for our team is our purpose
Business Update Priorities
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Health and Safety
Quickly Implemented Actions
• Reinforced hand washing and
branch based social distancing
• Implementing best in class
hygiene and sanitization SOPs
• Prohibited non-essential travel
• Implemented on-site social
distancing processes
• Mandated work from home
policy as applicable
• Launched paid sick leave
Proactive Communications
• Critical information from CDC
and WHO communicated to all
• Conducting daily leadership
calls
• Frequent collaboration with
regional field leadership
• Broadcasting regular CEO
communication to all
employees
Execution of Best Practices
• Created tactical working groups
• Tracking potential cases and
exposure
• Adhering to all state and local
mandates and guidelines
• Active dialogue with all
customers
• Assigned case worker to
support employees potentially
exposed
Landscaping Recognized as Essential Service
Updated March 28: The revised Guidance on the Essential Critical
Infrastructure Workforce: Ensuring Community and National Resilience in
COVID-19 Response Version 2.0 includes our industry in the Public Works
and Infrastructure Support Services section of DHS's "Memorandum on
Identification of Essential Critical Infrastructure Workers During COVID-19.“
Landscaping is included (on the "CISA list") as follows:
Workers such as plumbers, electricians, exterminators, builders, contractors,
HVAC Technicians, landscapers, and other service providers who provide
services that are necessary to maintaining the safety, sanitation, and essential
operation of residences, businesses and buildings such as hospitals, senior
living facilities, any temporary construction required to support COVID-19
response.
DHS says that "the list is advisory in nature. It is not, nor should it be
considered, a federal directive or standard." We will continue to work with all
jurisdictions to ensure that essential landscaping services can be delivered
as permitted.
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Executing Downturn Playbook; Implementing Prudent Actions to Preserve Cash
Execution and Business Continuity
• Temporarily deferring discretionary merit increases for all employees
• Implementing a hiring freeze
• Limiting all discretionary spending, such as travel and entertainment
• Preparing for potential layoffs / furloughs IF needed
• Limiting capital expenditures to absolute necessities that must be approved by the CEO
• Will implement other fixed cost / SG&A reductions IF needed
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Strong Liquidity with Multiple Levers to Unlock Cash
Credit Rating • B1/ B+ from Moody’s and S&P, respectively
Debt Structure • USD $1B Term Loan B priced at L+250
• USD $260M Revolver priced at L+225
• USD $200M Receivables Financing Agreement priced at L+170
Maturities• Term Loan B – 8/15/2025
• Revolver – 8/15/2023
• Receivables Financing Agreement – 2/20/2022
Financial
Covenants• None on Term Loan B
• $260M revolving credit facility: maximum net first lien secured debt1 to EBITDA of 6.5x, tested when 35% of revolving credit facility is utilized
• At current debt level of ~$1.3B, covenant not tripped unlessAdjusted EBITDAdecreases by >50%
Liquidity • Cash as of 12/31/2019 - $10.3M
• As of 12/31/2019, availability of $184M Revolving Credit Facility (net of $76M letters of credit committed against the facility)
• As of 12/31/2019, availability of $60M Receivables Financing Agreement
• As of 3/31/2020, additional $60M drawn on Revolving Credit Facility and $30M drawn on Receivables Financing Agreement – substantially
unutilized
Levers to
Unlock Cash• Working Capital
• AR andAP: Applying best practices
• Interest Expense: Benefiting from interest expense savings
• Tax: Taking advantage of opportunities provided by the CARES Act including payment extensions, tax credits, refund opportunities and minimizing
cash taxes
1 Net first lien secured debt defined as gross debt secured on a first priority basis less unrestricted cash and cash equivalents
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Living Our Purpose
IMPLEMENTING
SOCIAL
DISTANCING
Summary
• CARING FOR OUR TEAMS
• SERVING OUR CUSTOMERS
• EXECUTING TO MAINTAIN BUSINESS CONTINUITY
• PROTECTING OUR FINANCIAL STRENGTH, LIQUIDITY AND FLEXIBILITY
• LIVING OUR PURPOSE
“At BrightView, we’re there when needed.”
Andrew Masterman, President & CEO