BrightView Holdings, Inc. (NYSE:BV) Q1 2023 Earnings Call Transcript

George Tong: Got it, that’s helpful. And then diving into the land business, perhaps ancillary services, can you talk a little bit – about the uptake there, how trends are performing and especially given potentially the macro sensitivity of ancillary in the more discretionary in nature of ancillary services, if you expect to see any volatility there or any pullback in spend as we potentially head into a macro slowdown?

Andrew Masterman: Yes, we’re not seeing any indications of our customers reducing their amount of inquiries on ancillary spending from the properties. And in fact, as you’re seeing increasing return to work happening out in the marketplace and in commercial buildings, you’re seeing increasing travel for hospitality type areas. We’re actually seeing continued investment in properties and external environments that really fuel our ancillary part of our business. And so, we don’t see that happening as we’re at sit here today. And also, frankly well, this may be a temporary situation due to the lack of snowfall, the budgets that typically were allocated towards snow removal will likely be able to be freed up to a certain point to be allocated towards ancillary services as we move into the spring.

George Tong: Got it, very helpful. Thank you.

Operator: Thank you. Our next question comes from the line of Justin Hauke of Robert W. Baird. The line is now open. Please go ahead.

Justin Hauke: Hi good morning. Most of my questions have been answered. I’ve got kind of two technical ones here. I guess first, congrats on the putting the hedge in place and on so much of your debt and saving the cash interest expense, that’s great. But I guess I wanted to ask, so the gains on that hedge, it looks like there was about $3 million in the quarter? And I don’t see that backed out of your EBITDA reconciliation. And so I’m just clarifying whether that is backed out and what we should expect, how you would treat that going forward since there’s such a large hedge in place now?

Brett Urban: Yes, Justin hi, this is Brett. You look at our Q1 results should be backed out of interest – interest related. We did have a hedge about $0.5 billion hedges that rolled off the last quarter was Q1 of this quarter we just finished. And essentially, I have to comment. I mean if you think about the headwind is entered into about 70% of our total debt, we feel very excited about that. Not only that, it’s going to essentially save $10 million of cash interest on an annual basis. But since we’ve done that, we’ve actually seen rates pick up slightly from the time we put that hedge in. So we feel great that we’ve made that move and it’s essentially capping our maximum amount of interest for the year and giving us some opportunity given the floor that we have in one of the hedges to share some upside if rates were to revert course.

Justin Hauke: Okay. So I guess, the $3 million gain in the P&L is adjusted to the interest expense and reconciliation, okay?

Brett Urban: That’s correct.

Justin Hauke: Okay all right, just want to make sure. And then my second question is, if you could just give us an update on the amount of acquisition revenue in total you’re assuming now for the year based on the wrap from the acquisitions last year and then plus you’ve done another three so far year-to-date. So just to kind of – obviously, you always – there’s more that could come in, but just what you have already in place on the ’23 number?

Brett Urban: Yes, I’ll take that again. This is Brett. If you look at our first quarter results, and we did have a significant amount of acquisitions we did in years past, but thinking back to our guide in Q4 – our statements in Q4. This year, we’re looking at about 2% acquisition growth in the company. That would be around $40 million. In years past, we’ve kind of guided more towards 3%. And then we’ve outpaced that 3%. Look, we’re continuing to be strategic and opportunistic in acquisitions We’ve made 3 so far in fiscal ’22. I will say we’ve spent significantly less on that line through kind of Q1, Q2 combined, wherein prior years, we’ve spent upwards of $50 million to $60 million through two quarters. And now, we’re south of $15 million. So we’re balancing our debt levels and our acquisitions. We’re going to continue to be opportunistic in doing that. But we’re guiding to about 2% growth in total in the P&L through acquisition this year.

Justin Hauke: Okay great. So no change there either, all right. I guess that will do it from me. Thank you.

Brett Urban: Thank you.

Operator: Thank you. Our final question comes from Andrew Steinerman of JPMorgan. Your line is now open. Please go ahead.

Andrew Steinerman: Hi Andrew, I know predicting snowfall is difficult and you just gave us your sense of this winter. But do you feel like we might be in a situation with temperatures warming over time where kind of lower snowfall is the more typical situation kind of over the winters ahead?