Dale Asplund: Yeah, Maggie, let me start. I’ll take the back half of your question with the capital, and then I’ll kick it over to Brett on the free cash flow. I think, as Brett had commented, the business did the right things in 2023, when we made strategic decisions to manage the capital down when we saw the snow business with the record level of reduced snow that we saw last year and the business reacted very well. Thus, demonstrating our ability to flex the business up or down and drive it by our CapEx and produce the free cash flow that we did. As far as the future guide on that free cash flow, I think a healthy range is probably closer, maybe 3.5% that Brett mentioned is a little elevated, but I do think there’s a plan for us to drive maybe a little shorter-term use of our vehicles and get a little more residual value as we go through the process, and we’re going to have a little catch-up on that.
Because don’t forget, these vehicles that our employees operated in, they are our billboard that goes out and visits our customers. So the appearance of those that our employees work in every day is critical for our brand that we represent the customers. But let me kick it over to Brett, and he can give you some on the non-reoccurring.
Brett Urban: Yeah, Maggie, great question. Look, first off, I’ll say we are extremely pleased with our cash flow performance this year. Coming off the year in FY ’22, where we generated $7 million of free cash flow and then we went and bought acquisitions after that and essentially took out debt to do so. That was not the game plan coming into ’23. We were very clear with that early in our conversations on earnings calls and just really excited to report we delivered great cash flow performance of $80 million in the year. And we actually put money into the bank to keep on the sidelines for future strategic investments in the business. So extremely pleased about that. And as you think about last year to this year, the $70 million to the $80 million, yeah, we saw, as it wasn’t snowing in Q2, we made a strategic decision to pull back on CapEx that benefited our cash flow year-over-year, roughly $50 million for the CapEx year-over-year down.
But look, I think that was very strategic and shows the flexibility of our balance sheet, as Dale mentioned. In the year with low snow, we’re able to flex capital down a bit in years as we’re guiding in ’24, we’re expecting a more, call it, historical snowfall, we would flex that CapEx guide up a little bit. And you think about ’24 guidance, a range of cash flow of $45 million to $75 million. That’s coming off the year where we did have about $25 million of onetime favorable impacts in our cash flow, whether it was related to tax benefits we got from our tax planning or partial sale of our interest rate hedge we had on our collar. But regardless of that, as you think about ’24 guide, we’re looking at guiding to a point of $60 million to even at the high end, $75 million, $80 million of free cash, which has put us back to where this year was.
And that’s through improved operating results and some of the savings on our interest expense, which, as you can see, we’re redeploying capital back into the business. So dollars were saving — our capital, dollars were saving — I’m sorry, dollars we’re saving on interest and dollars we’re saving in other areas of the balance sheet, we’ll redeploy back in the capital, as Dale mentioned, we’ll refresh our fleet and be able to put our employees in a much more favorable working environment every day.
Unidentified Analyst: Okay. Great. That’s super helpful. And then, Dale, you kind of touched on this in your prepared remarks, but the guide for next year assumes minimal contribution from incremental M&A which has previously been a bigger focus for the company. I guess how do you think about the strategy around M&A over the near term? And should we expect to pause on deals in fiscal ’24?
Dale Asplund: Yeah. Yeah. Great question, Maggie. First of all, I am a absolute firm believer in M&A. I am a supportive person that when we can make an investment, when we can be a better owner of the asset, we should take advantage of that. And as being the nation’s largest landscape provider, we should be able to do that. Unfortunately, I think historically, the way we’ve done M&A at BrightView, needs to be revamped. We have to get our operators involved earlier. We have to evaluate M&A, not just on the short-term financial benefits. We have to look at culturally and strategically as important as just the initial math. And then the day that we buy a company, we must integrate it into our business. We are going to put our precious capital to work deploying it for M&A.
So we have to find a way to make sure our foundation is ready that when that capital gets deployed, we grow that business. and we grow it very profitably because as the owner of that business, we can leverage our size and scale to provide processes, provided systems and corporate overhead that they shouldn’t need on their own. So I am a firm believer in M&A. Maybe for the next couple of quarters, we don’t plan on doing much, but we have already started to revamp our process to get everybody working together, starting with our field leaders to make sure the deals we do are the right deals. And then as we bring them in, we find a way to make sure we’re a much better owner of that asset as part of BrightView. So make no — we didn’t put a lot into our guide, but make no bones about it.
