Brightview (BV) 4th quarter 2020 earnings report review
Category: Brightview (BV)
Date: 18 November 2020 Stock price of Brightview $14.65 We take a look at the 4th quarter 2020 earnings report of Brightview, one of the largest landscaping and garden maintenance firms in the USA. The group reported net revenues of $608.1 million and a loss of -$6.1 million for the quarter.
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Our fourth quarter and full year results highlight the continued resiliency of our contract-based business, reflect the positive underlying trends of our strong-on-strong acquisition strategy, and the benefits of the investments we are making in being a best-in-class maintenance services company. This quarter we delivered strong cash generation and liquidity, underpinned by our on-going focus on working capital and reducing capital expenditures- Andrew Masterman, BrightView President and Chief Executive Officer"
More About Brightview
BrightView provides high-quality landscape services with an unwavering commitment to client service. As the nation’s leading commercial landscaping services company, BrightView’s 21,500 team members provide services ranging from landscape maintenance and enhancements to tree care and landscape development for thousands of client properties, including corporate and commercial properties, homeowners’ associations, public parks, hotels and resorts, hospitals and other healthcare facilities, educational institutions, restaurants and retail, and golf courses. BrightView landscapes positively impact millions of lives every day.
Overview of BrightView's 4th quarter and full fiscal 2020 earnings
Fourth Quarter Fiscal 2020
Full Year Fiscal 2020
“During the quarter we generated a record $77.4 million in Free Cash Flow, totaling $197.2 million for the full fiscal year, also a record for the Company,” said John Feenan, BrightView Executive Vice President and Chief Financial Officer. “We continue to maintain a disciplined financial policy while remaining intensely focused on accretive transactions and paying down debt. The fundamentals of our business and our industry remain strong and our cash generation, combined with continued modest capital needs, will continue to drive stockholder value.”
- Record Net cash provided by operating activities of $83.2 million and Free Cash Flow of $77.4 million.
- Total revenue of $608.1 million, Net Loss of $6.1 million, and Net Loss Margin of 1.0%.
- Adjusted EBITDA of $90.0 million, and Adjusted EBITDA Margin of 14.8%.
- All branches operational with no limitations on scope of services.
Full Year Fiscal 2020
- Record Net cash provided by operating activities of $245.1 million and Free Cash Flow of $197.2 million.
- Total revenue of $2.346 billion, Net Loss of $41.6 million
- Adjusted EBITDA of $271.6 million.
- Total Net Financial Debt decreased $115.9 million. Total Net Financial Debt to Adjusted EBITDA ratio at 3.7x.
- Inclusive of acquisitions, Maintenance contract-based business increased to 103% of prior year.
“During the quarter we generated a record $77.4 million in Free Cash Flow, totaling $197.2 million for the full fiscal year, also a record for the Company,” said John Feenan, BrightView Executive Vice President and Chief Financial Officer. “We continue to maintain a disciplined financial policy while remaining intensely focused on accretive transactions and paying down debt. The fundamentals of our business and our industry remain strong and our cash generation, combined with continued modest capital needs, will continue to drive stockholder value.”
BrightView's management commentary on their 4th quarter 2020 earnings
BLUE BELL, Pa.--(BUSINESS WIRE)-- BrightView Holdings, Inc. (NYSE: BV) (the “Company” or “BrightView”), the leading commercial landscaping services company in the United States, today reported unaudited results for the fourth quarter and audited results for the full fiscal year ended September 30, 2020.
“Our fourth quarter and full year results highlight the continued resiliency of our contract-based business, reflect the positive underlying trends of our strong-on-strong acquisition strategy, and the benefits of the investments we are making in being a best-in-class maintenance services company. This quarter we delivered strong cash generation and liquidity, underpinned by our on-going focus on working capital and reducing capital expenditures,” said Andrew Masterman, BrightView President and Chief Executive Officer. “Our services and results of operations continue to benefit from a designation as an essential service. And our team continues to do an incredible job responding to the COVID-19 crisis by prioritizing health and safety, focusing on our client relationships, and by delivering solid results in a challenging operating environment.”
“Our fourth quarter and full year results highlight the continued resiliency of our contract-based business, reflect the positive underlying trends of our strong-on-strong acquisition strategy, and the benefits of the investments we are making in being a best-in-class maintenance services company. This quarter we delivered strong cash generation and liquidity, underpinned by our on-going focus on working capital and reducing capital expenditures,” said Andrew Masterman, BrightView President and Chief Executive Officer. “Our services and results of operations continue to benefit from a designation as an essential service. And our team continues to do an incredible job responding to the COVID-19 crisis by prioritizing health and safety, focusing on our client relationships, and by delivering solid results in a challenging operating environment.”
“Despite ancillary softness and project delays, COVID-19 impacts to date have been modest due to our resilient contract revenue base, and our earnings have benefitted from cost management actions. Cash generation remains healthy, margins strong, our capex requirements remain modest, and we expect our M&A pipeline to continue to be a reliable and sustainable source of revenue growth,” Masterman said. “We expect COVID-19 impacts will continue to be felt over the next few quarters as conditions remain fluid. That said, we believe we are in a strong position to return to positive growth in fiscal 2021, with continued strong cash generation and solid Adjusted EBITDA results. And, we believe the digital, sales, training and other investments we are making in strengthening our business will drive long-term best-in-class performance.”
Recent Developments
Acquisition of Commercial Landscaping Company – All Commercial Landscaping Services (ACLS)
In September 2020, BrightView acquired ACLS, a full-service landscaping company specializing in landscape maintenance, irrigation, enhancement, arbor care and water management. Their clients include commercial, municipal, multi-family and retail organizations throughout the greater Fresno market.
Disposal of BrightView Tree Company, and Acquisition of Commercial Landscaping Company – Commercial Tree Care, Inc. (CTC)
In September 2020, BrightView sold its tree nursery business, BrightView Tree Company, and in October 2020, BrightView acquired CTC, a full-service tree care company based in San Jose, Calif. Founded in 1992, CTC is a full-service tree care provider specializing in pruning, tree removal, stump grinding, cabling, bracing, fertility treatment, pest and disease control, install and transplant, forestry fire fighting and timber harvesting. CTC also consults for development, appraisal, maintenance plans and overall site evaluation. The combination of these two transactions support BrightView’s overall strategic growth plan to redeploy assets from the Development segment to the Maintenance segment, as CTC will be accounted for in the Maintenance segment and BrightView Tree Company was accounted for in the Development segment.
Acquisition of Commercial Landscaping Company – Water, Land, Environment (WLE), LLC
In October 2020, BrightView acquired WLE, a commercial landscape maintenance and development company headquartered in Austin, Texas. Founded in 2003, WLE (Water | Land | Environment) is a full-service commercial landscape management company, whose 250-member team serves HOA, developer, commercial, and municipal clients across three markets in Central Texas.
COVID-19 Update
Recent Developments
Acquisition of Commercial Landscaping Company – All Commercial Landscaping Services (ACLS)
In September 2020, BrightView acquired ACLS, a full-service landscaping company specializing in landscape maintenance, irrigation, enhancement, arbor care and water management. Their clients include commercial, municipal, multi-family and retail organizations throughout the greater Fresno market.
Disposal of BrightView Tree Company, and Acquisition of Commercial Landscaping Company – Commercial Tree Care, Inc. (CTC)
In September 2020, BrightView sold its tree nursery business, BrightView Tree Company, and in October 2020, BrightView acquired CTC, a full-service tree care company based in San Jose, Calif. Founded in 1992, CTC is a full-service tree care provider specializing in pruning, tree removal, stump grinding, cabling, bracing, fertility treatment, pest and disease control, install and transplant, forestry fire fighting and timber harvesting. CTC also consults for development, appraisal, maintenance plans and overall site evaluation. The combination of these two transactions support BrightView’s overall strategic growth plan to redeploy assets from the Development segment to the Maintenance segment, as CTC will be accounted for in the Maintenance segment and BrightView Tree Company was accounted for in the Development segment.
Acquisition of Commercial Landscaping Company – Water, Land, Environment (WLE), LLC
In October 2020, BrightView acquired WLE, a commercial landscape maintenance and development company headquartered in Austin, Texas. Founded in 2003, WLE (Water | Land | Environment) is a full-service commercial landscape management company, whose 250-member team serves HOA, developer, commercial, and municipal clients across three markets in Central Texas.
COVID-19 Update
- Throughout the entire country, landscape maintenance is recognized as an essential service.
- All branches are operational with no limitations on scope of services.
- Executed downturn playbook and are continuing to exercise prudence, limiting discretionary spending, managing capital expenditures and working capital, and enhancing liquidity.
- Prioritizing additional actions to protect revenue and margins, and preserve cash in the event of a continued and prolonged resurgence.
- Specific Health and Safety actions include:
- Proactively communicating critical information from CDC to employees.
- Implemented branch based social distancing and hygiene and sanitization procedures.
- Continuing to prohibit non-essential travel and mandated work from home policies as applicable.
- Adhering to state and local mandates and guidelines.
- Tracking current and potential exposures, imposing quarantine measures, and assigning case workers.
- Implemented protocols requiring face coverings.
BrightView (BV) stock price history over the last 5 years
The image below, obtained from Google shows the stock price history of The BrightView (BV) for the last 5 years and it's been a pretty good time for BrightView stockholders over the last 5 years. 5 years ago the stock was trading at $4.55 and its currently trading at $14.65. That's a very strong return of 219% provided to BrightView stockholders over the last 5 years.
The stock of BrightView is trading at a lot closer to its 52 week high than it is to its 52 week low which shows the short term sentiment and momentum of BrightView's stock is positive at this point in time.
The stock of BrightView is trading at a lot closer to its 52 week high than it is to its 52 week low which shows the short term sentiment and momentum of BrightView's stock is positive at this point in time.
Latest stock valuation of BrightView (BV)
So what is BrightView stock worth based on their 4th quarter 2020 earnings report? Based on their earnings report and the fact that BrightView is currently loss making our valuation model provides a target price (full value price) for BrightView at $12.60 a stock.
We therefore believe the stock of BrightView is overvalued at its current price of $14.65
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $12.60 thus a good entry point into The BrightView would be at $11.40 or below.
We expect the stock of BrightView to pull back from current levels in coming weeks and months to levels closer to our target price (full value price).
We therefore believe the stock of BrightView is overvalued at its current price of $14.65
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $12.60 thus a good entry point into The BrightView would be at $11.40 or below.
We expect the stock of BrightView to pull back from current levels in coming weeks and months to levels closer to our target price (full value price).
Next earnings release of BrightView (BV)
It is expected that BrightView will release their 1st quarter 2021 earnings report in late February 2021
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