BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect...

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BrightView Business Update in Response to the Coronavirus (COVID-19) April 7, 2020

Transcript of BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect...

Page 1: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

BrightViewBusiness Update in Response to the Coronavirus (COVID-19)

April 7, 2020

Page 2: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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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

Page 3: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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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

Page 4: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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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

Page 5: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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.

Page 6: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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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

Page 7: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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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

Page 8: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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Living Our Purpose

IMPLEMENTING

SOCIAL

DISTANCING

Page 9: BrightView...2020/04/07  · The forward-looking statements contained in this presentation reflect our current views with respect to future events, and we assume no obligation to update

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