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Good morning, ladies and gentlemen and welcome to the BrightView Q2 Fiscal 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday May 4, 2023. I would now like to turn the conference over to Faten Freiha, Vice President of Investor Relations. Please go ahead.

Thank you for joining BrightView's second quarter fiscal 2023 earnings conference call. Paul Raether, BrightView's Chairman of the Board of Directors; Andrew Masterman, Chief Executive Officer; and Brett Urban, Chief Financial Officer are on the call. Please remember that some of the comments made today including responses to questions and information reflected on the presentation slides are forward-looking and actual results may differ materially from those projected. Please refer to the company's SEC filings for more detail on the risks and uncertainties that could impact the company's future operating results and financial condition. Comments made today will also include a discussion of certain non-GAAP financial measures. Reconciliations to comparable GAAP financial measures are provided in today's press release. Disclaimers on forward-looking statements and non-GAAP financial measures apply both to today's prepared remarks as well as the Q&A. I will now turn the call over to Paul Raether, BrightView's Chairman of the Board of Directors for some comments.

Thank you, Faten and good morning to everyone. Earlier today, we announced that Andrew Masterman will be stepping down from his position as President, Chief Executive Officer and Board Director effective May 31. Andrew has been a great leader for BrightView. He joined us in 2016 and successfully led the company's initial public offering in 2018. During his tenure, the company executed more than 35 strategic acquisitions, modernized its technology and finance infrastructure, professionalized its sales organization, expanded our omnichannel marketing capabilities and achieved the best safety record in the company's history. Following Andrew's last day on May 31, Jim Abrahamson, a member of our Board of Directors since 2015 and an experienced CEO, will step in as Interim President and CEO. Jim brings extensive knowledge of BrightView and the industry as well as over 30 years of management experience in large public and private companies that operated in dynamic environments. We're searching for Andrew's successor in partnership with an executive search firm. In the meantime, we have full confidence in Jim's ability to continue to execute BrightView's strategy in partnership with our talented management team. Andrew, on behalf of the Board, I want to thank you again for all your contributions to BrightView. I will now turn the call over to you.

Thank you, Paul. It's been a privilege to serve as BrightView's CEO over the last seven years. I'm proud of what we've accomplished to date, and I'm confident in BrightView's future progress and success. Today, BrightView is an industry leader with a recognized brand and a nationwide footprint with over 21,000 high-quality team members. We have significantly improved our customer service through strategic technology investments, digital services and marketing. The company has grown tremendously. I'm confident that positive momentum will continue. I look forward to working with Jim over the next few weeks to ensure a smooth transition. With that let me give you some high-level commentary of the quarter before turning to the results. I'd like to first start by thanking the entire BrightView team for their outstanding execution and dedication. I am proud to report on their hard work, which resulted in a solid quarter, anchored by strategic, operational and financial success. We delivered our eighth consecutive quarter of land organic growth, our second consecutive quarter of underlying land margin expansion and our third consecutive quarter of development margin expansion. Our top line results benefited from strong new sales, pricing actions and acquisition benefits. Importantly, investments in our sales force and technology continue to support the strength and durability of our top line results. From a profitability perspective, underlying land and development margins expanded, as we continue to execute on pricing efforts, implemented operating efficiency initiatives and maintained our disciplined cost management approach. Our ability to gain more efficiencies in our business, enables us to continue to invest behind our proven strategy and drive long-term profitable growth. Our priority remains clear. We will focus on business elements we can control, most notably driving sustainable land and development organic growth, executing on accretive acquisitions while implementing cost management initiatives to mitigate against externally driven headwinds and improve profitability. Let me begin by reviewing the highlights for the second quarter on Slide 4. Revenue performance was supported primarily by land organic growth as well as some contribution from accretive M&A transactions. New sales growth and stabilizing retention rates powered land organic growth of approximately 2%. Ancillary revenue was flat year-over-year, as growth in many parts of the country was offset by significant rainfall across coastal markets. The development business outperformed our expectations for the quarter as a result of our strong backlog. Our development team remains focused on customer engagement adding new projects in targeted markets which is resulting in an extremely robust and high-quality backlog. We remain very optimistic about fiscal 2023 and expect development organic growth to be 10% plus for the second half of this fiscal year. Adjusted EBITDA for the second quarter was $47 million, above the high end of our guidance range of $33 million to $43 million, as underlying land and development margins outperformed our expectations, driven by pricing initiatives and disciplined cost management. It is clear that we are starting to see an inflection point in our margin profile and we expect this improvement to continue for the second half of fiscal 2023 and beyond. Lastly, we remain disciplined stewards of capital. In Q2, we reduced capital expenditures by more than 50% and doubled our free cash flow compared to the prior year. In addition, relative to Q1 we reduced net debt by $56 million effectively utilizing our cash to reduce debt. These results underscore the continued focus on reducing leverage. Let's move to Slide 5 to review our strategic pillars to drive long-term growth. This strategy continues to power the momentum we see in our business and remain centered around three main pillars. First, delivering organic growth through our dedicated locally driven sales force of 200-plus team members focused on acquiring new customers. Second, executing on our strategic and accretive M&A transactions enabling efficient expansion into attractive select markets. Third, investing in technology, digital services and marketing continues to grow our opportunity pipeline and delivers a differentiated customer value proposition resulting in expanded market share. The sales force is driving strong sales growth across our business. Their consistent execution drives the confidence behind our expectation for organic growth in fiscal year 2023 and beyond. We continue to see solid customer demand in our contract-based business and our development pipeline remains robust. Importantly, we are not seeing any indications of a slowdown in our landscaping markets. Our acquisition strategy remains to increase our density and leadership position in existing local markets enter attractive new geographic markets, expand our portfolio of landscape enhancement services and improve our technical capabilities and specialized services. We deliberately slowed our acquisitions for this current fiscal year relative to the prior two years in an effort to prioritize and balance our cash profile. That being said, we have a large pipeline of M&A opportunities affording us select and strategic acquisitions at very attractive multiples. Let's now turn to Slide 6 to discuss technology in a bit more detail. Leveraging digital innovation across a number of platforms has helped drive net new growth and is one of the reasons we continue to enjoy organic growth exceeding industry rates. Furthermore, our initiatives around digital implementation tools have a time horizon of several years as we continue to roll our features based on customer feedback. This fiscal year, we launched our streamlined customer engagement tool BV Connect enabling us to continue to transform our business into a more digital and future-focused organization. Through BV Connect customers are able to submit service requests receive service confirmations contact their BrightView team view enhancement proposals review quality site assessments and access maintenance schedules all in one place. This tool was created based on customer feedback and we intend to continually improve upon it to further drive engagement and retention. A couple of weeks ago, we launched a robust omnichannel marketing campaign in conjunction with our spring activities and sales efforts to generate awareness of BV Connect. Furthermore, we are hosting information sessions to educate customers on its benefits and seeing significant interest and engagement particularly with our larger commercial and HOA customers. We are proactively marketing our digital services and excited to see continued customer engagement. By the end of the fiscal year, we expect the majority of our top customers to be utilizing this unique and differentiated platform. Let's move to Slide 7 to discuss how we are managing our cost structure to maintain margin expansion over the near and long-term. As you know, we have seen strong top line growth in our business over the last 2-plus years. Over that period of time total profitability has been impacted by externally driven factors including significantly lower than average snowfall historically high inflation and spikes in fuel prices. To help mitigate against these headwinds, future potential headwinds and drive efficiency in the business we launched Project Accelerate. Project Accelerate is a company-wide program that will deliver ongoing operating efficiency by eliminating duplicative work, improving processes and reducing overall costs. Essentially, this will reorganize the company to get work done faster, better and drive enhanced productivity. As a result, we are eliminating positions through workforce reductions and the hiring freeze. Furthermore, we are reducing T&A expenses, discretionary spending, third-party consultants and strategically managing marketing costs and IT expenditures. The benefit from these actions will be reflected in our guidance for the remainder of this fiscal year and for next year. In total, Project Accelerate is expected to drive at least $20 million in annualized cost savings. As I mentioned earlier, these savings may be offset by macro headwinds outside of our control. In addition to Project Accelerate, we remain committed to our long-standing margin improvement initiatives across our segments. In land maintenance, pricing efforts remain on track. Over the last couple of years wage rates and material costs have risen significantly, through our pricing initiatives, which we began implementing in the second half of last year, we succeeded in offsetting most of these increases. As a result, we expect to continue to drive margin expansion within our land maintenance business. In the development business, which was impacted by the increase in material costs during the pandemic, we shifted contract lead times to allow 10 to 15 days of pricing commitments compared to three to six months historically. And this has resulted in an improvement in our development margins in the last three quarters. In addition, our development team is focused on building a quality backlog to continue to drive margin expansion over time. From a corporate perspective, we remain committed to very strict cost management protocols and are laser-focused on managing our corporate expenses, which remained flat relative to fiscal 2018 even with $0.5 billion more in total revenue. As you can see we are taking a dynamic approach to driving margin expansion. We are offsetting labor and operating costs through pricing initiatives and we are managing our fixed and SG&A expenses through efficiency measures and cost reductions. We are focusing on what we can control and positioning the business for success in an ever-changing macroeconomic environment. The existing margin expansion initiatives coupled with Project Accelerate give us confidence in our ability to deliver continued margin expansion in both land and development. Before turning it over to Brett, I'd like to reiterate some of the key highlights of why we remain optimistic about BrightView and its prospects over the short and long-term. First we have a strong resilient and agile business. We are leaders in our industry with an unparalleled customer value proposition supported by investments behind digital services and sustainability. We invested heavily in our capabilities in these areas to be able to address our customers' needs. We have multiple opportunities organic and M&A that will power our growth and drive long-term profitability. We are executing against the strategic growth initiatives and driving strong momentum in our business. We delivered two years of consecutive quarter-over-quarter land organic growth and expanded margins in our underlying land segment for two consecutive quarters. We expect this margin expansion momentum to continue into the second half of the year. Through Project Accelerate we are reorganizing the business to drive ongoing efficiencies enabling us to mitigate against external macro headwinds including variability of snow revenue and inflation. Our free cash flow continues to improve in fiscal 2023 underscoring the strength and scalability of our business model. I'll now turn it over to Brett who will discuss our financial performance in greater detail.

Thank you, Andrew, and good morning to everyone. I am pleased to report on another strong quarter supported by land organic growth and underlying core margin improvement. Our priorities remain unchanged, consistently growing our top line, improving profitability and our balance sheet as well as executing on capital allocation plans that create long-term shareholder value. With that, let's turn to our results for the second quarter. Moving to slide 10. This slide showcases revenue drivers for the quarter by segment. As you can see, total revenue was impacted by a $77 million decline in organic snow revenues due to a below-average snowfall, a macro dynamic we incorporated into our guidance and is outside our control. For reference, across our footprint for the second quarter, snowfall was at 50% of the 10-year average compared to 91% in the prior year. In our land business, we saw solid top line growth anchored by 1.6% organic growth, our eighth consecutive quarter of land organic growth as well as acquisition benefits. Land organic growth was driven by robust new sales, pricing initiatives and stabilizing retention rates. In the development business, results were impacted by a mix of projects but came in ahead of our expectations due to the strong backlog. We remain very optimistic about our development business and pipeline of projects in fiscal 2023 as well as fiscal 2024. Turning now to profitability and the details on slide 11. Total adjusted EBITDA for the second quarter was $47 million, reflecting a decline of $13 million, driven by significantly below average snowfall, which impacted total adjusted EBITDA by approximately $19 million relative to the prior year. As Andrew noted, adjusted EBITDA for the quarter came in above the high end of our guidance range by roughly $4 million. Since no results were within our expectations, the outperformance was driven by underlying land and development EBITDA. It's clear that snowfall had a significant impact on our results for the quarter. So let's turn to slide 12 to discuss margin expansion by segment excluding snow. In the Maintenance segment, land revenue grew by $14 million composed of both land organic and acquisition-related growth. Total adjusted EBITDA of $51.7 million declined by approximately $11 million from the prior year. As I mentioned earlier, the snow EBITDA headwind was approximately $19 million. As a result, excluding the snow impact, we drove an $8 million growth in our land maintenance adjusted EBITDA. This growth was driven by our continued focus on pricing, operational efficiencies and prudent cost management. In the Development segment, adjusted EBITDA for the second quarter was $13.1 million, up approximately 2% compared to the prior year. Development adjusted EBITDA margin was up 40 basis points year-over-year at the high-end of our guidance range of 20 to 40 basis points. Although development revenue declined year-over-year due to mix of projects, we were able to more than offset that deceleration with our strict material cost management combined with operational efficiencies. This marks our third consecutive quarter of development margin expansion and we expect this to continue in the second half of this fiscal year. Let's now turn to slide 13 to review our capital expenditures, debt and free cash flow for the quarter. Net CapEx for the second quarter was $13 million compared to $34 million in the prior year, reflecting a $21 million year-over-year decrease. As evidenced by these results, we are taking a very disciplined approach to our capital expenditures. In addition, we are enhancing our target for fiscal 2023 to be 3% or less of total revenue compared to the 3% to 3.25% range we provided last quarter. We expect this to benefit our free cash flow by an incremental $10 million versus prior expectations. Sequentially, we reduced our net debt by $56 million as we utilize our cash flow this quarter to pay down debt. Looking ahead, we intend to focus on improving our leverage ratio by growing our EBITDA and reducing our debt. For Q2 of fiscal 2023, free cash flow more than doubled compared to the prior year and was $71 million. Free cash flow benefited from purposeful management of CapEx, improvement in working capital and a one-time benefit associated with the Cares Act. We feel great about this improvement and expect it to continue for the remainder of fiscal 2023. Let's now turn to slide 14 to review our outlook for the third quarter and full year fiscal 2023. As you can see on the slide, we expect for the third quarter, total revenues of $770 million to $790 million and total adjusted EBITDA of $99 million to $104 million. As for the full year, we expect total revenues of $2.82 billion to $2.86 billion and total adjusted EBITDA of $292 million to $303 million. Our guidance for the second half of the fiscal year assumes the following: 2% to 3% land organic growth; maintenance margin expansion of 20 to 30 basis points; development organic growth north of 10%; development margin expansion of 50 to 60 basis points; a net benefit of $3 million to $4 million from fuel if prices remain consistent with current averages; and lastly, we expect to realize a small portion of the anticipated annualized savings from Project Accelerate in the fourth quarter, enabling us to offset inflationary headwinds. We expect majority of the benefits from Project Accelerate to come through in fiscal 2024. We remain optimistic about the strength of our business, its underlying fundamentals and our prospects ahead. For fiscal 2023, as we said last quarter, despite the historically low snowfall in the first half of the year, we intend to deliver strong organic growth and margin expansion in both our land and development business. Before turning the call back to Andrew, I'd like to address two questions that we've been getting from investors. Number one, our path to drive adjusted EBITDA margin expansion; and number two, how we plan to de-lever the balance sheet. Let's start with the first one and discuss margins on slide 15. As we think about margin expansion, we are focused on drivers we can control. First, continued pricing efforts and enhanced productivity in our maintenance business. Second, in our development business we expect our material cost management to continue to drive margin improvement. And third, Project Accelerate will deliver cost savings and enhance our efficiencies across our business and offset the impact of externally driven headwinds. As a result of these efforts and as the midpoint of our guidance implies, we project year-over-year adjusted EBITDA margin expansion of approximately 50 basis points for the second half of the year. Looking ahead to fiscal 2024, we expect to maintain this momentum and as snow normalizes in fiscal 2024, we would anticipate additional upside. Let's turn to slide 16 to discuss the second question and highlight our path to delevering. We are taking a two-pronged approach to improve our leverage ratio over time. First, we are focused on improving EBITDA through the strong top line growth and margin expansion efforts I just reviewed. And second, we are improving our free cash flow through capping our interest expense, managing working capital, reducing capital expenditures and paying down debt. It's important to note that we executed on all of these levers this quarter, as evidenced by our results. Ultimately, we are dedicated to improving our leverage ratio over time by growing adjusted EBITDA and paying down our debt. With that, let me turn the call back over to Andrew.

Thank you, Brett. Now, let's turn to slide 18 to wrap up. Year-to-date for fiscal 2023, we are very pleased with the results and proud of our financial and strategic progress amid a dynamic environment. We are executing on our growth drivers, investing in our sales team and technology which is leading to solid and sustainable organic growth. Our M&A strategy continues to be a consistent and sustainable source of growth. Our pricing efforts build on that expansion and support our ability to offset cost headwinds. And from a profitability lens, we are maintaining a prudent approach to reducing and managing our expenses through Project Accelerate. In addition, our disciplined cost management will continue to enable investments in the business to drive long-term growth. We are committed to positioning the business to thrive in the face of external macro headwinds, changing secular trends and regulatory requirements. From a capital allocation perspective, we remain disciplined stewards of capital. We are reducing capital expenditures, while growing the business, improving our free cash flow and reducing our debt. These actions underscore the flexibility of BrightView's business model and our ability to position the company to succeed in a dynamic and ever-changing environment. I believe that Jim, as Interim President and CEO, and the leadership team have the right strategy and plan to succeed. I will be partnering with Jim over the next month to ensure a smooth transition and I'm confident the team's efforts will continue to position BrightView for profitable growth over the near and long term. We all remain very optimistic about the company's future and I want to thank our teams for their dedicated response to the winter storms and their continued attention to designing, creating, maintaining and enhancing the best landscapes on Earth. Thank you for your interest and for your attention this morning. Brett and I will now open the call for your questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session [Operator Instructions] Your first question comes from Tim Mulrooney. Tim, please go ahead.

Good morning, Tim

Got it. That's helpful. Strongest selling month ever. That's quite a, statement. That's great to hear. My other question is about CapEx. You cut CapEx and that's great for free cash flow, but I am curious about, what that means for the future where those cuts were primarily, if it was new equipment new trucks or something else. Because I know that you pride yourself on keeping a young fleet of trucks and high-quality of your equipment base, keeps those maintenance costs down. So my question I guess is, how might CapEx cuts today impact OpEx costs, a year or two down the line? Thank you.

Got it very helpful. Thank you,

Tim, just one last comment. Your point on the age of the fleet. Last year, we invested $100 million of CapEx in the business. It was the highest we've invested as a public company and we in turn reduced our fleet by over a year, or age of our fleet by over a year, making it newer. So, we did a lot of investment last year. It gives us the flexibility to even reduce CapEx, a bit more this year.

Thank you. Your next question comes from Bob Labick Bob, please go ahead.

Hi, Bob.

So I wanted to start with -- can you talk a little bit about labor? So labor availability cost of labor and then the trends in labor inflation? And then I guess kind of tie it in with your pricing negotiations, your ability to pass through price, but just more so like availability and the trends in inflation to start please?

Generally speaking I mean this is our peak hiring season. We hire about 5,000 employees between the end of March and the end of May, bringing them into the business obviously to deal with the heavy spring season. What we've seen this year is a slightly better recruiting environment I would say, but I'd say ever so slightly. It's not dramatically different. But certainly we're having a little more luck in finding folks locally. In addition due to the expansion or the acceleration of the H2B program by the government rather than just 33,000 visas released at the beginning of the year 33000 were released and then an additional 33,000 were very quickly released after that for a total of 66,000 visas available for the country. We were successful in securing actually slightly more visas than we had last year. And so we feel very comfortable that we have a great position as we go into the season, not only from local-sourced people but also an enhanced position of H2B relative to last year. I guess on your pricing question right a follow-up on pricing was we continue to see a receptivity at customers on pricing. As long as we see the inflation levels at this level and I think there's an understanding most of these property managers and HOAs they're managing other things which have direct labor content in them. And so as they're managing those, they see the inflationary environments and our discussion around being able to recover costs that are also inflating continues to be a positive environment with our customers.

Okay. Super. And then you have a nice slide I think 15 or so on driving core margin improvement, you lay out a couple of factors and you talked about back half of this year. Could you maybe expand upon the core margins improvement opportunity? And talk about the bridge back to the -- so if we're a 10% 10.5% today back to the 12%-plus margins that you've seen in the past what are the kind of key components maybe to get us there in a broad time horizon?

Yes, Bob, it's Brett. I'll touch on a couple of questions in there. Slide 15 we have a slide on driving core margin improvement. Yes, I think if you look at the underlying business for the last two quarters in land when you normalize for snow and strip that out we saw land margin improvement. We put a slide in the earnings deck showing that the land revenue in totality grew $14 million year-over-year roughly half organic half M&A and that drove roughly $8 million of EBITDA earnings year-over-year in land. So, extremely excited that second quarter in the underlying land business once normalized for snow, you see margin improvement. And then development posted 40 basis points in Q2 as well marked a third quarter of margin improvement sequentially in development. And as we look ahead to the second half of the year we're calling margins in maintenance up 20 to 30 basis points for the second half of the year to see continued margin improvement in maintenance and development will be closer to 50 to 60 basis points in the second half of the year. So, we're looking at five sequential quarters now of development by the end of the year improving margin and maintenance would be four. And as you think about kind of that path back to pre-pandemic margins, this year is roughly 10.5% at the midpoint of the guidance. And then as you think about building back to next year, it's going to be that continued momentum in margin improvement in the back half of the year, which we're seeing in the company on both maintenance 20 and 30 basis points and development that should be roughly around 50 basis points of margin expansion heading into next year all things being equal. And then Project Accelerate as you think about that layering in that's going to mainly have an impact a little bit in Q4 fiscal 2023, but mainly in fiscal 2024. So, that would be an incremental somewhere between $15 million and $20 million of underlying EBITDA improvement. And you kind of put those things together, that's marching you back to a path of somewhere in the low 11% range. And then if snow normalizes or gets anywhere close to prior year averages which by the way is below normal, it takes you back up in the mid-11% to high 11% range.

Okay, that’s super. Appreciate that bridge. Thank you.

Thank you. Your next question comes from George Tong. George, please go ahead.

Hi, thanks. Good morning. Andrew I also wanted to say congrats on the tenure and best wishes ahead.

Thanks, George.

So you're guiding to development growth of 10% plus in the second half. How much visibility do you have into that growth outlook? Were there deals pushed from the first half into the second half that would help you clinch that growth? What does your backlog tell you? Any details here would be helpful.

Sure. And let me address it both in maintenance and in development. Starting with development, our backlog is fully booked into Q3 and Q4. So that 10% plus growth we have is secure and it really comes down to our ability to get it in and not having too many delays or by our – by the subcontractors well before us. So really that's really the only thing that's going to really impact that is making sure that the rest of the subs and the projects continue as they normally do. So – but we have confidence as most summers go by and large across the enterprise but that booked growth is there and we will execute to that. On the maintenance side of the business, our contract side is booked. It is in place, which gives us confidence around the growth that we have. The only variable that really comes into play is the ancillary side of the business from the degree that we pulled through the ancillary business. As we look into – right now into Q3, we have indications that support that growth rate of 2% to 3% in the overall maintenance business. But of course, we need to see us moved through May into June, before we can – we post those actual results. But again, contract is booked for maintenance, development is booked with backlog. The only revenue kind of variability we have is the ancillary side of the maintenance business.

Got it. That's helpful color. Thank you. And then you're slowing your M&A over the near term to prioritize cash and strengthening the balance sheet. Has your view on M&A broadly changed? And when would you expect to reengage in M&A at a level that's as consistent with historical activity?

Yes. It really is a balance sheet issue right here that we're just prioritizing and we paid $56 million of cash down, used that cash to pay down debt this quarter. We will expect as we continue to generate cash to use that priority – primarily to pay down debt we're at today. But as we look at the M&A pipeline, it's as robust as ever. It's $700 million. We're as confident as we've ever been in being able to execute on those transactions we're just being a little more picky, as we look right now out there. We expect to do somewhere between one to three transactions before the end of the fiscal year. And we're lined up as we look into next year, we've always given a range of 2% to 3% of M&A. We're just going to be doing it to the lower end of that range as we look right now. And if things and cash flow debt improve as we think they will we'll be probably accelerating it back towards that 3% level.

Very helpful. Thank you.

Thank you. Your next question comes from Andrew Steinerman. Andrew, please go ahead.

This is Alex Hess [ph] on for Andrew Steinerman. Andrew wishing you all the best of luck in your next venture and thanks for all that you helped us on. Maybe sticking with the contract book as it is right now in the – and even to a degree the ancillary book within maintenance land, could you highlight some of how that business has changed in the last two, three, four years? Yes, then I'll have a follow-up.

Yes. The contract side – the contracts of a base of our maintenance business I'd have to say in general, it has remained very stable. It's grown at a very, very modest rate, 1% to 1.5% is the contract rate. And as we look at the business, I think that there hasn't been any dramatic change in the behavior of the property owners. In fact, I'd have to say they continue to be very interested in improving their property and how their property looks, especially as we exit the pandemic. And I think that's evidenced by the fact that our ancillary rates have actually continued to improve slightly after – slightly over the last two, three, four years. Not dramatic increases or improvements but just slight improvements. So I think their general approach to property management has been fairly consistent.

Got it. And then, maybe taking a step back and thinking longer term on BrightView. I know that, you will be on your next venture by then, but is there anything that really structurally caps your ability to grow? Is there some route in your view to BrightView hitting mid-single-digit organic in maintenance land over the cycle?

Yes. No. I mean, if you look at the overall algorithm, given the fact that we only have about a 3% market share out there in the marketplace, there is abundant room to grow for the foreseeable future. And that's both inorganic as well as organic growth that we see out there. There's no reason why sustained kind of ability to grow in that 2% to 3% range, I think is a very doable do. The only thing that would limit our ability to grow is our ability to attract and retain great people to run the business. And we see being able to digest and run 2% 3%, we can find folks and develop them internally to be able to handle that level of growth and are looking -- and occasionally be able to exceed that kind of growth to be able to staff the jobs and the branches as we grow in that manner. So I don't think there's really anything that is indicative of the market that would impede our ability to grow. In fact, it's quite the correlate opposite of that. I'm very optimistic about being able to grow at above market rates on a consistent basis going forward.

Got it. Thank you very much.

Thank you. [Operator Instructions] Your next question comes from Andy Wittmann. Andy, please go ahead.

Yes. Great. And Andrew, best of luck. It's been nice working with you.

Thanks, so much.

You bet. I wanted to ask and maybe put a little bit finer point on the M&A with a slight tone change here to reducing debt. I just wanted to understand what's in the guidance range that you've given us. I think previously, as I was looking at my notes, you were previously saying that there was about $35 million of revenue to this fiscal year 2023 from deals that were closed last year. And that you were expecting probably another $20 million from deals that were going to be closed this year to contribute this year. Are those numbers still correct with the new approach towards capital allocation, or is there a different assumption that's implicit in the guidance this year?

Hey, Andy, it's Brett. In the guidance this year, through two quarters we posted M&A revenues of about $50 million. So when we came out in Q4 we said about 2% this year, just given with the heightened focus on debt and cash that we do about 2% M&A contributions to revenue, $50 million of that or call it more than 1.5% is in the bank. And our guidance does not assume we have to do any new transactions at the midpoint. And if we were to do any transactions, it would tick revenue up towards the higher end. But at this point, I think Andrew mentioned just a minute ago, we're looking at potentially one to three additional M&A transactions this year. But that would push us up more towards the higher end of guidance range for revenue. And that's only if they're at the right multiples and we're being very selective in that process.

Also, looking forward, the M&A deals that we are potentially going to conclude are relatively smaller in nature. So you cannot expect them to have any big significant impact on the overall fiscal year in 2023, but should have begin to build towards that 2% number for 2024.

Okay. That's helpful. I guess, the corollary to that question is, what's the implication or what are you thinking about for interest expense now in this -- for this year? I guess, you've put some hedges in place to cap your upside exposure -- or rising rate exposure and so, I just want to make sure we ask that question too as it affects your free cash flow outlook for the year.

Yes. As we talked about in our last earnings call, we're very pleased that we've put our hedges in place in January. And we're pleased that we're opportunistic last April to extend our term loan to 2029. So we have no significant maturities on the horizon. We've capped our interest expense, essentially around $100 million as the cap. There's some timing related in Q2 to the hedges, but essentially we're sticking to that $100 million here for fiscal 2023. And then as we go into 2024 based on the future curve of SOFR we'd expect that to come down in 2024.

That's helpful as well. Thank you. And then, I guess I didn't hear a cash cost number attached to the Project Accelerate $20 million EBITDA that you hope to realize. I was wondering what that cash number could be and when you expect it to be used.

Yes Andy, good question. I would say, the majority of the cash number associated with Project Accelerate would be in Q3, Q4. We don't expect that -- the number to be material. As you look at some of the items in Project Accelerate, the only one that would really consume any cash would be the FTE or employee-related items. But other than that, it could be $1 million to $2 million, call it, net cash impact from Project Accelerate, which you'd see sometime towards the end of Q3, beginning of Q4.

Okay. Also, very helpful. And then I guess, Andrew just kind of one bigger picture for you. I just want to understand kind of what you're thinking about the macro a little bit different way, because what I heard in your prepared remarks is that, several times here that the development pipeline is good that you're fully booked. Backlog there is good. So that's good. I always think about that as the most cyclical part of your business and I would think that if there's any impacts from the macro would kind of show up there first. But you also -- when you're talking about Project Accelerate, you had the qualification and said hey, we think it's $20 million but like the macro could change. So you hedged a little bit. So, I just -- could you just expand upon the comments, so we can think about it the way at least you're thinking about it, how this all plays out?

Absolutely. Yes, first of all with development we are booking now into 2024 at a faster rate than we booked into 2023. So we're actually better positioned now vis-à-vis 2024, which gives us even more confidence and that's on a slight growth. That's again, kind of 2% to 3% organic growth. We're booking at a faster pace into 2024 than we did for 2023. So that's some of the things that give us confidence about the overall bookings rate in the Development segment. And that does have our best visibility into the future out of the entire business. When it comes to Project Accelerate my comments on kind of other macroeconomic headwinds, what I mean by that is potential fuel spikes, potential continued snowfall impact or whether it's some other significant variable cost event, which in the past has put weight on the P&L. This Project Accelerate is intended to be able to grow the margins of the business but -- and or say or offset any unanticipated spike to maintain the level of profitability. But if there is no other macroeconomic factor, you should expect to see that manifest itself on the P&L.

Okay. That's more clear. I didn't know if that hedge on the $20 million was a demand side equation where recession hits ancillary gets cut back and you got to factor that in. So that -- it sounds like you're really focused on cost side shocks not demand side shocks.

Correct. That's absolutely correct.

Okay. Got it. Thank you.

Thank you. There are no further questions at this time. I will now turn it back to Andrew Masterman, CEO. Please go ahead.

Thank you, operator. And once again, I want to thank everyone for participating in the call today and for your interest in BrightView. And be safe and look forward to talking with you again as we move forward.