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Good day, and welcome to BrightView's Earnings Call. [Operator Instructions] Please note today's call will be recorded and I'll be standing-by if you should need any assistance. It is now my pleasure to turn the call over to Chris Stoczko, Vice President of Finance and Investor Relations. Please go ahead.

Good morning, and thank you for joining BrightView's first quarter earnings call. Dale Asplund, BrightView's President and Chief Executive Officer; and Brett Urban, Chief Financial Officer, are on the call. I will now refer you to Slides 2 and 3 of the presentation, which can also be found on our website and contains our safe harbor disclaimer. Our presentation includes forward-looking statements subject to risks and uncertainties. In addition, during the call, we will refer to certain non-GAAP financial measures. Please see our press release and 8-K issued yesterday for reconciliation of these measures. Before turning the call over to Dale, I would like to highlight our upcoming Investor Day that we are hosting in New York City on February 19. The link to register is on Slide 16 of today's presentation and can also be found in the Investor Relations section of our website. With that, I will now turn the call over to Dale.

Thank you, Chris, and good morning, everyone. I'm happy to share we're off to a strong start in 2025 as the benefits of our evolving One BrightView culture continue to gain momentum. As I visit our branches, it is becoming increasingly clear the teams are working together to tackle the many initiatives underway and collectively sharing best practices, all while building stronger connections across the organization. This is highly encouraging and proof the One BrightView strategy is working and gaining traction. Turning to Slide 5. I will provide a brief business update as well as hit on our 2025 priorities. We delivered double-digit EBITDA growth on a year-over-year basis and expanded EBITDA margins by 120 basis points with positive contributions from both segments. We are on track to deliver on our previously provided 2025 financial guidance which will result in another record EBITDA year as our transformation continues. Our outlook is underpinned by multiple initiatives underway. This is driving improved employee turnover and higher customer retention rates, reconfirming our conviction in delivering land growth in the back-half of this year. This will ultimately improve our status as the employer and service provider of choice. As we outlined in the bottom half of this slide, our objectives remain clear. Continue to embrace a unified One BrightView culture, prioritize our employees and customers to be the clear employer and service provider of choice and leverage our size and scale to further differentiate ourselves from the competition. Moving on to Slide 6. This highlights the success we are having in continuing to improve our employee turnover. As we have previously discussed, we are aggressively refreshing our fleet, including trucks, trailers and mowers as an avenue to prioritize our employees. This has not only resulted in further improvement in our employee turnover, but is also resulting in fewer unplanned equipment failures and work stoppages and most importantly, these investments improve the quality of service we provide our customers. In addition to our fleet strategy, we're also pivoting in certain markets to four, 10-hour days, versus five, eight-hour days. This benefit is very attractive to our frontline as it provides more flexibility, consistency and a reliable paycheck. For instance, in the case of a rainout day, there is the possibility of working on the fifth day, so our frontline employees maintain a full week's worth of pay. This is being well received by our customers as well. As it provides added flexibility to stay on-track with the service schedule and avoid the weekend work, which is discouraged by many of our customers. We are also working towards offering more affordable healthcare benefits amongst other perks that we expect will continue to improve our employee turnover. With that said, I believe the takeaway is clear and that is, we are very well-positioned to continue to improve our employee turnover trends which in-turn improves our quality of and consistency of service and ultimately solidifies our position in the marketplace as the service provider of choice. Moving on to Slide 7. You can see the improved employee turnover trends are directly translating into higher customer retention rates as a result of improved communication, providing best-in-class service while delivering efficient, collaborative and unified service as the One BrightView culture becomes further entrenched into our daily routines. From a broader perspective, we've come a long way in our journey of transforming BrightView, but I want to be crystal clear. We are still in the early stages of the transformation. As we continue down this path, the benefits will be increasingly imperative in our financial results and will highlight the power of operating as a unified One BrightView. Turning to Slide 8. This is a high-level recap of many of the key One BrightView initiatives we have underway. Well, there is a lot more to do. We have made significant strides in my first 15 months and remain committed to continuing to deliver on our targets and initiatives. This has positioned us to deliver a second consecutive record year EBITDA and return our land business to growth in the second-half of 2025. As we look-ahead, significant opportunities remain with our focus on continuing to improve our employee turnover and customer retention while also leveraging our size and scale. We will go into much greater details on many of these topics during our Investor Day. But it is clear, there is much more to achieve, which will result in sustainable profitable growth and shareholder value creation. With that said, I will now turn the call over to Brett. Brett?

Thank you, Dale, and good morning to everyone. Before I start with my prepared remarks, I share Dale's conviction in our transformation and couldn't be more enthusiastic about the energy and momentum that continues to build. This passion, coupled with clear internal and external communication will further drive success in our broad-based and strategic transformation. I'll start on Slide 10. Total revenue for the first-quarter was $599 million, which is a modest increase when adjusting for the unwinding of the BES business and the sale of U.S. Lawns in the prior year. In Maintenance, we are increasingly encouraged by the underlying trends in our land business, notably improved employee turnover and customer retention, and our continued focus on cross-selling, as well as route density which will further contribute to our long-term profitable growth strategy. Snow in the quarter was relatively flat to the prior year in our core maintenance business. Switching to the Development business, revenue increased 3.5% as a result of the ongoing conversion of our high-quality backlog. As we continue to further align our One BrightView culture, we are seeing a growing number of cross-selling opportunities to convert development work into recurring maintenance contracts. This serves as one of the many levers that will contribute to sustainable top-line growth. Moving on to Slide 11, we highlight a variety of factors that are driving the path to core land growth. As you can see on the right of the slide, we are achieving consistent improvement and the momentum continues to build. With progress in multiple initiatives on the left-hand side of the slide, including improvement in frontline turnover and customer retention, we remain highly confident this trend will continue. Turning now to profitability on Slide 12. Total adjusted EBITDA for the first-quarter was $52.1 million, an increase of $5.4 million or 12% higher versus the prior year period. Adjusted EBITDA margins expanded by 120 basis points, which marks the seventh consecutive quarter of year-over-year margin expansion on a company-wide basis. The adjusted EBITDA margin in the Maintenance segment expanded 140 basis points as we continue to structurally improve this business, through ongoing cost and efficiency initiatives. The benefits of the stronger operating leverage will be exponentially compounded when we return land to revenue growth. In the Development segment, adjusted EBITDA for the first-quarter was $17.5 million, this represents another record first-quarter for this segment. The adjusted EBITDA margin expanded 80 basis points, which was driven by continued success in converting our high-quality backlog and further cost efficiencies. Now let's turn to Slide 13 to review our capital expenditures, adjusted free cash flow and leverage. As expected, we continued to execute our capital allocation and fleet strategy which resulted in a significant increase in capital expenditures, the highest-level in a single quarter since we've been public as we continue to diligently reinvest in our employees and our customers. Adjusted free-cash flow results for the quarter were extremely strong when considering the timing of capital expenditures. These investments will better position us for future sustainable growth. Net leverage at the end of the first quarter came in at 2.3 times, which compares to 2.9 times in the prior year period. This was driven by lower debt levels, improved profitability and improved liquidity. The improved leverage dynamics provide significant financial flexibility for continued investment in our employees, our fleet strategy and future opportunities to deliver profitable growth in the business. On Slide 14, we further elaborate on our strategic actions we have taken to fortify the balance sheet. We recently completed another repricing of our $738 million term-loan, which isn't due until 2029. The repricing reduces the interest rate by another 50 basis points. Coupled with the reprice for May 2024, our interest rate is favorable by 100 basis points which will result in cash interest savings of approximately $7.5 million annually and $35 million of savings through maturity. This ongoing proactive management of our balance sheet further demonstrates we are well positioned to continue to reinvest in the business and drive long-term shareholder value. Moving to Slide 15. We are reiterating our fiscal '25 revenue, EBITDA and adjusted free-cash flow guidance, which all remain unchanged. On this slide, we outlined our guidance, which translates to another record-breaking year in EBITDA and continued margin expansion. Additionally, our free-cash flow guidance coupled with ample liquidity provides significant financial flexibility to continue to reinvest in the business. Before turning the call back over to Dale, I want to thank every one of my 20,000 teammates who are quickly embracing the One BrightView strategy, which is integral to our continued success. Taking into consideration the wide scope of strategic initiatives underway, coupled with our lean capital structure and significant adjusted free cash flow generation, we are very well-positioned to return to land growth and deliver a second consecutive EBITDA record in 2025. With this said, I'm highly confident in saying the financial benefits have only just begun. With that, let me now turn the call back to Dale to wrap up on Slide 16.

Thanks, Brett. Before we open the call for questions, I also want to say how proud I am of all of our employees. I have said from day one, as we continue to prioritize our employees, put our customers first, leverage our size and scale and be diligent with our capital allocations, this will result in sustainable profitable growth and deliver significant long-term shareholder value. Lastly, I encourage our existing and potential shareholders to join us for our Investor Day on February 19. We will be sharing a lot of new details that will provide further clarity regarding our path to long-term profitable growth. Operator, you can now open the call for questions.

[Operator Instructions] Thank you. And we'll take our first question from Tim Mulrooney with William Blair. Please go ahead.

Dale, Brett, good morning.

Good morning, Tim.

I just wanted to level set on your expectations for maintenance, land organic growth this year. I think, I think last time we spoke, you expected core growth to inflect into positive territory in the - sometime in the second-half of this year if I'm not mistaken. Is that still your expectation? Can you just talk a little bit about your expectation for the trajectory of the core land organic growth?

Yes, Tim, I will start and I'll let Brett add. But you can see the momentum that we showed, every quarter, we're getting closer and closer to a breakeven point. Obviously, Q2 is our lowest land revenue quarter and it can be the most impacted by weather. So, what we've said is exactly right, what we're still committing to. Our focus is to make sure just like we've been growing development in the back-half of this year, we move our land business to that more normalized growth to fuel our future profitable growth. So, we are committed, Tim, to hitting that as our target and it is our key to our future, growing our land business just like we've grown development, all while being diligent on our overheads and cost structure. But Brett, do you want to add anything?

Yes, Tim, I would reiterate Dale's confidence. I mean, you look at Page 11 of the presentation, we're doing all the right things in the last 15 months since Dale has been on-board to take care of our employees. We're seeing turnover, that metric come down significantly. Those employees are taking care of our customers. We're continuing to see momentum building and customer retention improvement. So that's been great. And we're investing in our fleet in other areas to drive that land growth back into the positive territory. And every quarter that goes by, you start to see the momentum building of that ticking up now to that positive trajectory. So, we feel great sitting here today that in the second-half of the year, we will return land to growth.

Okay. That's very helpful. Thank you. And I also noticed Slide 7 of the presentation there, Brett, on customer retention, which also continues to build-in the right direction. I guess, I'm curious how far along the journey for better customer retention do you think you are at this point? Is there still more room to run here or are you kind of the low-hanging fruits been picked? If you, you know, if you - I guess one-way to do it would be looking at the company average versus your higher-performing branches, but however you want to talk about it, just looking to have a conversation about that. Thank you.

Yes, Tim, great question. What we've been preaching now for several quarters is the importance of customer retention. There's no metric more important than us taking care of our existing customers. And we are going to unpack why this metric is so critical as we get to our Investor Day on February 19, because this is the metric that drives our ability to grow and you said it, Tim, when we see customer retention at a certain level, we can absolutely grow this business organically. Now, if they're below a certain level, it creates significant headwind to grow and we're going to unpack that at the meeting. Just to remind you, every quarter we see positive momentum as you noted. When I joined 15 months ago and we'll give details on February 19, our customer retention was at all-time low levels. We are now showing positive momentum for my five quarters. So, do I think we're anywhere near where the possibility is? Heck, no. The company went public. We were around 85%. We said we dropped roughly 500 basis points-ish over the first five years of being public. I would just say that can't be our goal. We got to drive that retention above that 85% and there's still a lot of room to go. So, this metric is our opportunity to take better care of our customers. Year-one, you saw in the previous slide, employee retention has come a long way. That's going to drive this metric for years to come. So, we're far. If you want to put it in an analogy of baseball, we're still in the early innings from where we can be on this metric. So, we look at it every month. We're excited. We're building momentum and that's going to keep going. But Brett, you want to add for Tim anything?

No, I would agree. I mean, we're continuing to see momentum five quarters in a row since Dale started of continuing customer retention improvement and it is the most important metric in the business for long-term sustainable growth. And now that that metric is trending in the right direction, you're going to start to see us ramp-up our sales force as we get through the back-half of this year that really put the gas pedal down on land growth. So, we had to make sure that customer retention is trending in the right direction and that foundation of taking care of our customers has been fortified before we start to invest heavily in sales, but you're going to start to see us repurpose some of our dollars towards our sales team in the back-half of this year.

Thank you very much.

Hi, thanks, Tim.

Yep.

Thank you. Our next question will come from Bob Labick with CJS Securities. Please go ahead.

Good morning, congrats on a nice start to the fiscal year.

Thanks, Bob. Good morning.

Yes. So, obviously, you've been showing very strong EBITDA margin growth. I think you said seven straight quarters. I think it's 120 basis points here. Looking ahead, what are the biggest components to future, you know, margin lift and can you quantify, you know, maybe where margins can go over the next, I don't know, three, five years medium-term outlook?

Yes. Good question. I don't want to steal all the thunder that we have coming up for Investor Day, but on the 19th, we're going to share a lot of details on the levers we can pull. We are just getting started. This business should operate with margins well in the mid-teens and we'll give you that path, Bob. But they are the basic things that we should be able to leverage with the size and scale of the business. Simple things like procurement initiatives with better labor management tools to service our customers more effectively. Our fleet management, which Brett is going to talk about or as talked about on his opening script, just how much we've invested in capital and the improvement that keeps showing in the quality of service we give our customers. And then the ability to leverage our size and scales by centralizing the non-customer facing activities, so our branches can focus on growth. So, we have so many levers to pull, Bob, that's what's exciting. We are just getting started. We're 15 months in. And if I really look at the margin expansion opportunity, we're probably only more like three-quarters in. So, the first six months took me to get some visibility and listen to our team in the field, but the last several quarters, we're gaining momentum and you said it, 120-basis point improvement, 140 basis points improvement in our Maintenance business and still expand our Development business by 80 basis points in what is one of our lowest quarters, it's just a great, great story and it just shows the momentum as we build. And I hate to even say this, Bob, but Brett and I talk about it all the time. I hate to even guess a number, because we're going to be wrong. Our ability to keep driving that is a dependency on how well we can use technology, how well as a team we can work together. And then inevitably, how much growth we can do internally because that flow-through should produce even more margin expansion. But Brett, I'll let you add anything you want to add.

No, Bob, I think Dale hit all the high points. I mean, we have such opportunity to leverage our size and scale. If you look at our Development business in the quarter, they grew their revenue just over $6.5 million and they grew their EBITDA by $2 million. That's the operating leverage we plan to see in the land business when we return to growth. We feel like our cost structure is in a great place. The full-year guide margin improvement is 40 basis points to 80 basis points. We just put up 120 basis points in Q1. Keep in mind, it's our lowest EBITDA quarter out of all four quarters, but we feel great about where this business is trending from a margin expansion standpoint.

All right, Super. I don't want to steal too much more from the 19th, but just in general, is this margin expansion over the next, you know, three, five years medium-term? Is it mostly going to come from Maintenance? Is it coming from Development as well? Are there, you know, equal opportunities or where do you see the lion's share of the margin expansion coming from?

I think all the initiatives that I mentioned earlier, Bob, will benefit both segments of our business. We do not want to have walls and that's one of the big keys to One BrightView, breaking down those former silos, so we support the whole business. Anything we can centralize to take advantage of our size and scale will help our Maintenance business as much as our Development business. Any procurement we can do to benefit could really help the development side, while helping us on the maintenance side. I mean, we've got all these levers that we talked about, fleet improvement, all those things we used to spend money on maintenance, it's going to flow on both sides of our segments, both maintenance and development. So, it's so exciting, Bob, when you start laying out what that future path can look like because it's not just one-level of our business, it's both segments that we can help improve and drive long-term benefit on both EBITDA and EBITDA margin as we continue to work forward. Brett, anything?

No, I would agree. I mean, there's so many opportunities ahead of us. As you think about, you know, what's the path forward. I don't want to steal too much thunder from Investor Day in two weeks. We're going to share a lot of this and the plan to, you know, the plan to get margin expansion, revenue growth and how we're going to unlock these levers, but we have such opportunity ahead. I think what you saw in Q1 with over 100 basis points of margin expansion. And here in my script, I think the financial benefits have only just begun.

All right. Super. Well, I'm looking-forward to seeing everyone in a couple of weeks. Thanks.

Hi, you can Bob.

Thank you.

Thank you. Our next question will come from Greg Palm with Craig-Hallum Capital Group. Please go ahead.

Yes. Thanks. Good morning, everybody. Congrats on the continued progress here. I wanted to maybe dig into labor a bit more to start because that just seems to be a topic on everyone's minds lately, you are a large employer. So, I'm curious, what are you seeing in terms of availability, any inflationary concerns you're worried about? And, you know, it seems like you're putting a huge emphasis, you know, on a bunch of items that can, you know, maybe help continue to reduce turnover. So, you know, just help us understand how all these things you're doing might end-up being a competitive advantage?

Yes, yes, good question. It's a topic that we keep getting from many of our investors right now, Greg. So, I think it's worth spending a minute on this. First, I think we should step-back, instead of just talking about labor, let's talk about all the changes happening and like everyone, we are closely following any developments with the new administration. We think challenges in some of the things that are occurring can be right now with the - like tariffs that we're going to come on, then we pull them back. We are positioned very well and there is substantial benefit from things like bonus depreciation, tax regulation and goodwill. So, we are positioned very well. Now probably the one that we get asked the most is exactly what you said about our labor and our labor force. So, we put early in our presentation, the trend we're seeing on our frontline workforce. Let me just share with you some things that we're seeing. Our average frontline employee has over five years of tenure with the company. So, we have a very solid group of frontline employees. We are e-verified. We have great long-term employees. We are very well-positioned if there is some type of challenge in the end-market labor. Now on-top of that, what's driving our customer or our employee turnover to continue to decline are simple things we've done to take better care of those employees. I've said from day one, they are the key to taking better care of our customers. We've talked about the Boots program that we made sure they had proper foot attire to help them do their jobs. We talk about how we're focused on taking care of them safely. In my script, I talked about where we can we've leveraged different work schedules so they can make sure they get a reliable paycheck every week. We talked about our benefit cost reductions. All these things, our frontline employees are realizing the importance they have in our business. So, we are very, very well-positioned. We're not done. We're going to keep pushing on many levers that we can do. But I just want to say, if you think about that tenure, our biggest turnover challenge in the past wasn't our overall frontline labor group, it was that bottom 10% or 15% of our employees that we were constantly churning over. We continue to see that churn shrink as our new employees that come in feel better about the company they work for. In fact, I'll give one more touch point. We're going to unpack all this at Investor Day. We recently did an employee engagement survey for the first time in two years. And we looked back at the results from this year versus two years ago, the biggest improvement we saw in engaged employees came from our hourly workforce on the frontline. For the first time they feel like we are looking out for their better behalf. We have said it from day one. We have to be the employer of choice. We want people that want to be in the landscape industry to want to work for BrightView. And we've come so far in that journey and we're in a great spot. But Brett, do you want to add?

Yes. No, I think that's right on. I think two years ago, Greg, if you would have asked us this question around potential integration reform or changes coming in the labor market, we would have been a little bit more nervous to answer it, but we feel more confident than ever that given how we're taking care of our employees, that turnover coming down significantly. Our average tenure of our employee in the front-line being above five years. The more we can just do the right things by our employees, take care of them, the less reliant everything else becomes for us. And we feel extremely confident be able to service our customers just as we would any other season regardless of what happens in the labor market.

Yes, makes sense. Appreciate that color. And then my second question surrounds ancillary revenue. And I'm just kind of curious what you're seeing there if, you know, you're seeing any improvement yet, how much of that is tied to customer retention? Just trying to get a better sense of, you know, how big of a lever this could be in terms of, you know, accelerating or at least, you know, ramping-up in line with that expectation of returning to core land organic growth?

Yes, let me start at the highest level with a simple theme. Happy customers trust you to do more discretionary work. So, the longer you can drive customer retention, the happier your customers are, the more they want to talk to you about additional projects on their property. So - and we're going to share a lot of that data at Investor Day, it is directly correlated, Greg. I would tell you, we saw in our first quarter, everybody saw there was a couple of storms that hit from hurricanes that hit across Florida. A little bit of the challenge we saw was the first storm hit September 26 and then quickly, there was another storm that developed, which hit October 9. So, while we saw some cleanup after the October 9, there wasn't much work happening as people prepared and didn't clean-up from the first storm as they got ready for the second one to come in. So, we had a de-minimis effect basically from the storm. But I would tell you this, Greg, we've seen in the majority of our markets well over 50%, in fact, two-thirds, we've actually returned to a more stable year-over-year ancillary level and we only have two markets right now that we're actually showing some headwinds on ancillary. So, we keep driving customer retention, it's going to keep fueling that discretionary spend they have. But we feel great. We feel even the markets, while this mark - while this quarter is our lowest land quarter and it can be the most impacted by weather, we feel like we're positioned well for the back-half of the year to see all of our markets return to more positive nature on ancillary revenue. But Greg, or Brett, anything?

No, I would go to Dale's highest comment that the longer customers stay with us, the happier they are, which generally translates to them trusting us more to do additional work. And there's a direct correlation between our momentum building in land growth and the momentum we've seen in customer retention. So, a lot more to come on Investor Day. We'll share a lot more about that correlation, but we're excited on the momentum and the path that the business has taken forward.

Yes. We'll look-forward to digging into this and seeing all you guys in a couple of weeks. Thanks.

Hi, thank you, Greg.

Thank you, Greg.

Thank you. Our next question will come from Jeffrey Stevenson with Loop Capital. Please go ahead.

Hi, thanks for taking my questions and congrats on the nice quarter. So, I wanted to ask what were the primary drivers of the outsized maintenance margin expansion during the quarter compared with your annual guidance and, you know, how we should think about the cadence of maintenance margin expansion as we move through fiscal '25?

Yes. So, good question, Jeff. Obviously, if you think about that maintenance margin expansion, 140 basis points in the quarter year-over-year is great results. Now many people on the call that followed the story for the last 15 months here in one quarter, saw last year, we restructured our go-to-market by putting our sales reps in our branch, by changing the overhead structure to make sure our regional teams were over both maintenance and development and just get everybody working better together. That created some significant SG&A save overall on the business. That carried through into the first quarter, which really drove that margin impact for this quarter. Now roughly, that's about $10 million of SG&A save that we got in the quarter. And we invested a lot of that back into different areas like our frontline labor. I've said it from day one, some of the problems we had on customer service was trying to squeeze that frontline workforce too hard to do the work and not giving them enough time to service our customers. We are now investing that money, servicing our customers better and it's going to continue to go in our customer retention as we move forward. The one thing I would say if you talk about just cadence at a high-level, as we lap that by the time we get to the end of Q2, we'll have that no longer as a huge benefit. But Brett said it earlier, as we start growing this business and we get flow-through above our margins, we see the opportunity to continue to show expansion. Great quarter. We're going to keep focused. We're going to keep pushing and we think we're going to continue to drive margin expansion through the year.

Yes, I'd agree with that, Jeff. This is Brett. You know, our guide for the year is to improve maintenance margins to 12.6% to 13% somewhere in that range, which is 60 basis points to 100 basis points. Obviously, the first-quarter blew through that from an expectation standpoint. But then again, we're going to start, you know, investing in our sellers, making sure our sales force is ramped-up and get ready for that land growth in the back-half of the year. But I will say we feel extremely confident on that maintenance margin expansion guide for the year.

That's great to hear, Brett. No, thanks for that. And, you know, it's been a cold start to the year in most seasonal markets, which should help your snow removal business. And, you know, I just wondered if you've had any initial success increasing your fixed contract concentration in your snow business or whether it will take a winter with elevated snow levels to result in a meaningful shift, you know, toward BES from variable in the following year?

Yes, Jeff, great point. I think the year-after you get a lot of volume is usually the best time where customers want to be more willing to spread those costs through the season with a fixed type rate over the variable that they might get hit with one or two months. And like you said, some of the markets that we've actually seen snow that traditionally, we don't get snow. We saw snow in the panhandle of Florida this year. It didn't stay long and it melted pretty quick, but you get snow across Georgia, across the Carolinas, into Virginia, D.C. Some of those markets are ones where customers want to try to set-up on more of a fixed schedule. So, we made progress last year in some markets, but I will tell you this year will just further give us the ability as we work with our customers on land and snow going into 2026 to continue that shift to make sure we're positioned well. We're happy with where we finished snow. Obviously, we had the unwind of the BES business, but our core business was actually up $2 million on snow revenue. So, it was a great story for us and we'll continue to do it. Our focus is simple, and we're going to share this at Investor Day. We want to take care of our customers all year around. We want to make sure if they use us for land, we take care of them in the seasonal time when they need snow removal. But we got to partner with them because there is a fixed cost for keeping people to make sure we can do it. And when the problems come with weather, they need us to be there and make sure that their properties are safe for their employees. So, we're probably making this progress as I expected, but this is going to position us, Jeff, for next year to take it to the next step. Hope that answers your question.

No, it does. No, thank you. And I look forward to seeing everyone in a few weeks.

We'll see you in New York.

Thank you. Our next question will come from George Tong with Goldman Sachs. Please go ahead.

Hi, thanks. Good morning. You talked about ancillary --.

Hi, good morning, George.

Hi, Dale. You talked about ancillary revenue headwinds in your landscape maintenance business in two of your regions. Can you talk more about characteristics in these two markets that contributed to lower ancillary demand? In other words, what separates these two markets from other markets that you have?

Look, I've got many markets, obviously. I would tell you, a couple of them have a little more tree revenue that we saw some headwind, George, but there's so much opportunity across the country to try to drive future ancillary revenue. Like I said earlier, ancillary is simple. Where you have happy customers, they spend discretionary money. If you ask me what could be a correlation, maybe some of those markets, our retention is not as high as some of the markets that are growing ancillary. So it's a direct correlation. We know what we can do to fix it. We're preaching to every branch manager, every team we have in this company, it all starts with customer retention and making sure you communicate with your customers and they're happy. So, I would tell you, we're going to show it in a couple of weeks, you're going to see that correlation and that's why we are so focused on customer retention, customer retention, customer retention.

And, George, I'd just add, I mean, we don't provide quarterly guidance, but, you know, if you think about Q1 from a revenue standpoint, it's exactly where we expected it to be. From a non-core perspective and from a core perspective, we mentioned we had some things to step over in the first two quarters of the year. A lot of our transformational chain strategy happened in the back-half of last year. So, still taking some time to, you know, to get adopted out there in the field, but it's exactly where we expected it to be. And when we return land to growth in the back-half of the year, that's when you're really going to start to see these benefits exponentially compound in the financial statements.

Got it. That makes sense. And related to that, with your expectations of improving core landscape maintenance revenue growth in the second-half of the year, how much of that is dependent on ancillary revenues improving versus other internal initiatives you may have like increased cross-selling?

Yes. Look, I think it's all going to contribute. We're going to unpack how we plan to be able to grow land. We're not - but there's so many moving pieces, George. We're not committed on any one magic that the development to maintenance conversion, we continue to see momentum there; ancillary, we continue to see momentum; contract revenue, we continue to see momentum. We're not relying on only one metric. Every one of these things are going to add value for our ability to grow in the second-half. Look, we want to service our customers, happier customers want to do more discretionary work with you. That just shows me we have happy customers and I feel like that will translate to even higher retention. So, these are just - they're all levers that we've got to watch and pull as often as we can. There's not one more important than the other. Getting the customer that we do development and turning them into a happy maintenance customer is just as critical as getting ancillary work, making sure our customer retention grows is just as critical as getting the development work. So, we are pulling all the levers and our Chief Commercial Officer, Michael Dozier, works on this every week. So, he's focused. His focus can be with his teams.

Very helpful. Thank you.

Thanks, George.

Thank you. Our next question will come from Andy Wittmann with Baird. Please go ahead.

Great. Thanks for taking my questions. And I guess my first question here is related to the guidance, which at a high-level is unchanged, but it looks like some of the assumptions in the footnotes have changed a little bit. So, I wanted to have you guys just talk and explain this a little bit. But last quarter, you were estimating that the non-core impact from BES and U.S. Lawns runoff was going to be $20 million, but this quarter it's up to $28 million, yet your revenue guidance is unchanged. So, I guess kind of a two-part question. First part being how - what was the difference in that? How did that increase from $20 million to $28 million? Like I would have thought you had - you would have had pretty good insight as to what that number was going to be? And then secondly of all, like your headline revenue guidance isn't changed. So, I was just wondering if the quarter if something changed in your outlook that offsets that or if that's just normal $8 million and it's a wide range. So, we don't care. I suspect it's the latter, but just thought I'd give you a chance to address that?

Yes, yes, great question. I'll let the BES unwind and the final sale of U.S. Lawns, which occurred in the mid-January last year and that will all be lapped here in Q2. I'll let Brett walk you through the math. I think you had said it, Andy, we have two buckets for that. First was what we had said on the land side and Brett will walk you through that. But then there's also the impact of snow. We saw BES snow be $9 million in the quarter and then we said it's going to be $33 million, so $24 million more in Q2. But let me let Brett add in his bridge of where he was and where we are for the unwind of those two things, going from our estimated $20 million to the new $28 million.

Andy, good clarification question. I would say, first and foremost, the decisions we made a year-ago to unwind our BES business and to sell our franchise business is absolutely the right decisions. And I think Dale and I, you know, will be extremely happy when we get to the end of Q2. We don't have to talk about non-core versus core anymore. I think that's the big takeaway. But from last guide to this guide, we said $15 million and $5 million for BES land unwind, $15 million step over in Q1, $5 million step over in Q2 from a land perspective. The one-piece we really should have clarified and, and we can now is the U.S. Lawns business. U.S. loans business produced about $5 million of revenue in Q1 last year. So that's the bridge between the $15 million and plus the $5 million, gets you to the $20 million. And then last year, we did have it for one month before we executed that sales. So, we had a few million dollars of U.S. Lawns. That's really the difference in the land bridge and the footnote on the guide. But look, I think they're absolutely proven to be the right decisions to exit the BES business and to sell the franchise business in U.S. Lawns. And we'll be very excited when we get to Q3 and this non-core core description is behind us.

Yes. Okay. All right. I just want to talk next a little bit about the development backlog. Maybe I missed it, maybe you didn't say it. Can you just tell us on a year-over-year basis on how that's trending? Is that - quantification would be great if you have it? And then just wanted to compare that against your revenue guidance and any discrepancies between the difference in the backlog growth and the difference in the expected revenue growth that you're seeing this year in development? I mean, development is obviously good, but I think your backlog, if I'm not mistaken, is up a lot more than even the high-end of that revenue development range. So, I decided to have your comments on why there might be a difference there?

Yes. I'll let Brett walk you through the financial part of it, Andy, but let me just say this. We're coming off two great growth years for our development group. Our development team is feeding our maintenance team as we've talked about with that development to maintenance conversion. We feel great about the business. We're not going to say are we going to come in at the 3% level or the 6% level. Obviously, we gave a pretty broad range, but any growth in that business to fuel the company to continue to grow and give us more opportunity to drive maintenance revenue in years to come is a key. But let me let Brett give you some of the financials if he wants to on the actual dollar back.

Yes, we feel great about that business. First and foremost, the growth in that business in the last two years sequentially has been 8% and 7% growth. So, we feel fantastic for coming off two banner years. The backlog is right around $900 million in that business, which keep in mind is this year and next year, right, we're selling into next year at this point. Our backlog for this year is essentially full. We're selling into 2026 revenues at this point. You know, generally, Andy, you could think about backlog being up about 6% to 7%. If you look at kind of the financials, specifically in the queue, our more than one year backlog is up about 6%. So just keep in mind, we are selling out beyond that 12-month period, but we feel great about the growth in the backlog. Timing will always have a little bit of an issue in development, you know, if we have a heavier winter, it could be a lighter, you know, growth rates in development. If we have some GCs or projects that push or pull into months or quarters, but generally between that 3% and 6% guide, we feel really, really strong that that business will be growing again in fiscal '25.

Okay. If you will afford me a third question here. I guess I wanted to go back to the margins just one more time because I think it's a really important part of this quarter. You've addressed some of this already, but, you know, the quarter, 120 basis points year-over-year is very good. The guidance is looking for less than that on an annual basis. So - and you're talking about, you know, once you get back to growth, I think you said that the margin improvement story will be exponentially better. So, all of the - so was there something in the comp year-over-year on the margin that made, you know, this level of 120 basis points like too high? It just feels like the indications - and this is - like you guys are doing great work. This is a lot of margin. So, I'm not saying that. It just feels like - as I hear the comments here, it kind of feels like there should be more. So maybe this is a what am I missing question, maybe it's something in the comp or something else and I just thought maybe I'd give you a chance to address this one more time and maybe in a little bit different way? Thanks.

Yes, let me start at high level, don't anchor on the midpoint. I know that if you anchor on the midpoint on revenue and EBITDA, you probably see margin that doesn't look as aggressive in the back-half of the year. We have a wide range, $335 million to $355 million and that's going to drive a pretty big range on the margin. I would say, Andy, if there is anything beneficial this quarter that won't be as beneficial from Q3 and Q4, it's a lot of those structural changes we made in Q2 that we were able to get a benefit. Now we have other changes that we're well underway right now to continue to drive margin expansion. And as we get through Q2, we see what the weather does and we see where we're at, we'll update everybody going into Q3 of where we're at. But we feel great. We're not saying you know that we're not going to hit our previously-stated multiple year goal of getting 100 basis points improvement every year. And I know at the midpoint, basically saying we're going to get 80 basis points this year. Our goal is to continue to improve. We had 110 basis points last year. We're going to push for you guys every quarter all year long to make sure we get everything that's available and try to get all those levers pulled as we go. But Brett?

Yes. We feel great about the opportunity in margins, Andy. I appreciate the opportunity to add a little bit more clarity. You know, we finished last year at 11.7% margins for the company on a TTM basis, including Q1, we have $330 million of TTM EBITDA, which is fantastic. That continues to grow, it will be a record TTM for the company. From a margin perspective, we're now north of 12% from a TTM perspective. So plus 30 basis points to 40 basis points is coming out of Q1. We are going to make some investments in the business and sellers and things like that, but we feel great about the margin opportunity this year in the business and we're going to continue to look at the guide and opportunities there, but we feel great about the margin expansion opportunity.

Thanks, guys. Talk to you in a couple of weeks.

All right, Andy. Thank you. Talk soon.

Thank you. We'll take our next question from Harold Antor with Jefferies. Please go ahead.

Hello, this is Harold Antor on for Stephanie Moore. So, I know you guys have talked about ramping-up your sales force and I know you've been making investments there. So, could you just help us, you know, how many salespeople do you have now, how many have you hired, how many do you plan to hire during the year? And then what's the timeframe that it takes for these people to ramp-up and become productive?

Yes. So, let's talk about our customer interfacing employees. So, we have two types of buckets here. We have our new salespeople that go out and get us new business. And then we had the people sell and ancillary and servicing our customers every month, our account managers. Our goal is to grow both those groups, Harold, and continue to invest in it. Now, without giving a numerical number, here's what I'm going to tell you. We had to fix our customer retention and get it moving in the right direction before we worry about bringing in more customers just to churn it. This is a service business. We have to serve our customers and be the best in the industry. As we do that, we are going to invest. And as we see those investments create value, we'll invest more. I think we have huge opportunity to make sure we have more feet-on-the-street to go out and get us new customers. Our reputation as those people are going around has to be working with BrightView is working with the best landscape company in the industry. So, I, without sharing you just the number, I'll tell you, we're going to add significant resources. The timing on it is yet to be determined. We've added some here in Q1 and Q2, but we're going to significantly ramp-up as our branches continue to get stable and we continue to grow. Brett?

Harold, I'll just add to it. The beauty of what we're doing now is we absolutely have the leverage and the operating leverage to afford to invest now back into the business. Our TTM SG&A from a TTM standpoint is down over 100 basis points from last year. So, you think about that SG&A savings we have, we're going to continue to centralize, create size and scale advantages for the G&A portion of that. And we're going to turn around and take some of those dollars and reinvest them back into us to grow our sales force. Not only can we do that through a P&L standpoint, but from a balance sheet standpoint, we have ample liquidity, as you could see in some of the slides we provided over $550 million to invest in our sellers into technology to help them sell into equipment to help them perform service for our customers in a more efficient way. So, we're not only best-positioned from a P&L standpoint on the G&A savings we have to make this investment, but we're the best position we've ever been from a balance sheet to support that investment and support the equipment needed to service our customers.

Yes, and, I think, I guess just on that equipment point, I know, you know, you've invested considerable resources in your fleet, which is trucks, mowers, et cetera. So, just, I guess, help us understand how many trucks and mowers have you purchased and plan to purchase during the year? How do you expect that to impact, I guess, repair and maintenance costs, improvement in-service levels, technician costs, et cetera. And if you could discuss, you know, how else you're thinking about capital allocation in the back - and - for the rest of the year given leverage is trending pretty attractive to hear about? Thank you.

Yes, I'll let Brett do the math for you, Harold. But here's what I can tell you. I enjoy spending a big portion of my time out with our teams in the field and visiting branches. The improvement in the equipment that they have to service our customers is enormous over the last 15 months. And the attitude of our employees to realize if they grow, we're going to give them equipment to fund that growth is a big change from where they were a year ago when they couldn't even keep their current fleet at the levels they need. So, let's just keep it at cultural in my comment, I feel like we have come so far, we're yet to finish. We got some work for different products like trailers and trucks. But Brett will give you the math. Culturally, people are seeing a significant difference both internally and our customers in the image that we're showing up on their job sites. But, Brett, you can --.

Yes, we'll leave some meat in the bone here, Harold, for Investor Day on February 19 to talk about kind of all the strategies in place. But I'll give you just one. You know, I'll talk about our core mower fleet for a second. You go back two years ago. We've had mowers in our fleet that were four, five, six years old, constantly breaking down, had to get repairs and maintenance. We had to rent mowers where things broke down. That's not only cost to the company, that's poor employee satisfaction and it's poor customer satisfaction. Right. Happy to report we have 7,500 core mowers in our fleet for BrightView. By the time we get through the end of this spring, we would have replaced every single one of those 7,500 core mowers. And we won't have one mower in the fleet that's older than 15 months old. So that's what a virtuous cycle looks like. When we get to next year and we start flipping those mowers and keeping the age about 12 to 15 months, we're going to start selling them at $0.40 to $0.50 on a dollar, where this year you can look at our cash flow statement. We're selling for pennies on a dollar now when you look at residuals. So, we're going to create that virtuous cycle. I gave you one example here for mowers, but we'll provide a whole lot more on February 19 at our Investor Day.

Thanks for all the color, guys and good job on the quarter.

Thanks, Harold.

Thanks, Harold.

Thank you. Our next question will come from Andrew Steinerman with JPMorgan. Please go ahead.

Hi guys, this is Alex Hess on for Andrew. I hope you're all well. Want to start with maybe drilling down to another level of precision on the chart on Slide 11 by my math, you saw in the core something like a 10-basis point quarter-on-quarter improvement in that core decline. So just confirming that that was 1.5% decline year-on-year core in 4Q land and then 1.4% last quarter and then I have some follow ups on this, but just…

Yes, let's make sure your models are right. We're in a fiscal quarter, so Q1 would be your math, not Q4. Just make sure we're aligned there.

We are on the same page.

Yes, you're doing your math, right. Look, we continue to see sequential improvement. If you want to break it down to the decimal, it was smaller than what's on the chart. But look, we continue to see sequential improvement. And as I mentioned earlier in the call, if we provided Q1 guidance, it would be exactly where we expected it to be. We tried to give some breadcrumbs on last call around when we expect land to return to growth, which we've clearly said would be the second half of the year. So, we feel just as confident as we did 90 days ago and reiterating that guidance that we feel confident that land will return to growth in the second-half of this year. And all that non-core stuff, Alex, as you are very well aware of will be behind us once we get past Q2 of this year.

Great. And then just staying on the subject, you did lap a, a notably easier year-ago compare in 1Q than in the prior quarter. I'm just trying to understand was there any aspect of the core where performance for whatever reason, you know, was tougher in this most recent quarter than in the prior quarter?

Yes, Alex, I'll just comment here for a second mathematically. I mean, you adjust for the non-core businesses and snow, U.S. Lawns and land impact, we grew the business in Q1. I know that gets muddied in the conversation here, but development grew. We had a small core growth in our snow. And then as expected, we're still ramping-up that land business with fixing customer retention, employee turnover, et cetera. So as expected, and you adjust for those non-core businesses, we saw a growth in Q1. So, we feel really good about the company continuing to grow when you take out some of the stuff that again was the right decision to divest the U.S. Lawns business and unwind the BES business. So, we feel great about the momentum in the company and great about the guidance for the rest of this year.

And guys, I hope you don't mind, I'd like to just get in a third while I have you. The snow guide was altered as well, including a raised BES expect - unwind expectation, can you comment on what's changed in your snow guide versus…

Yes, I'll comment. Yes, no problem. Just to be clear, look, our snow guide was $160 million to $200 million 90 days ago, it's $160 million to $200 million today. So, we have not changed that snow guide at all. What we have done, which I think you're seeing, Alex, in fairness is we're trying to provide the exact impact of BES, which we saw $9 million step over in Q1, right? We'll see another, call it $24 million in Q2. So that was included in our snow guidance originally, we just weren't as descriptive in the exact BES impact of that year-over-year. We just try to provide a little bit of more of that description now that we're in fiscal '25. But from a snow perspective, like Dale mentioned earlier in the call, most of our snow business is in Q2, about 80% plus in Q2. But Q1, we saw very similar to last year and we feel great about being in that range of the guide for snow.

I appreciate all your time today, Brett, thank you so much.

Thanks, Alex.

Thank you. Our next question will come from Carl Reichardt with BTIG. Please go ahead.

Hi, guys. Thanks for the time. Appreciate it. I want to go back to development for a second. Brett or Dale, can you talk about the conversion rate that you're seeing now from development contracts to maintenance contracts? And just remind us of sort of your long-term target is? Is that changing or shifting? And then within that context, cyclically speaking, where does the development business sit? I mean, we know the business has been growing, it's been growing a lot. We know commercial is soft right now in terms of new development. So, I'm just sort of interested in what you think the potential to grow in a more positive cyclical environment for development might be and then just that conversion, how you're working that conversion to maintenance contract?

We feel great about the team that we have for our development group. We think we can expand in almost any market, Carl, because there's markets we're not servicing today and we have the best people in the industry when it comes to putting in new development work. So, if we can move resources and we can cold start markets, we think we can grow in any environment. So, we feel great about our development opportunities for many years to come as we go-forward. Now on the development conversion, it was something that early when I joined the company, I saw as a challenge with the silos we had and we mentioned we were under 10% or roughly $5 million in 2023 with the teams not working together. We saw great progress as we went through last year, getting to somewhere around the mid-teens. I would tell you, Carl, it's tough to say where we're at this year. We saw momentum in Q4, but you got to look at it over the full-year. It can be timing as the job gets converted and what gets moved. I would tell you, this is front and center with every one of my regional leaders to make sure every job we're calling on combined the sales team from our development group that created the relationship and the maintenance person to make sure we're transitioning it. If we're going to do the install, customers should see BrightView as the benefit to do the maintenance long-term. So, it's come so-far. Development should be the tip of the spear for our maintenance group. We didn't do it well in the past, but we continue to make momentum. So, without giving a financial number, I would just tell you, it's higher than it was last year when we said it was mid-teens last year, but that's just one quarter. Let's get into our busy summer, and then we'll share some more details with you.

I appreciate that. I'll stop there because I know we're at time. Thanks folks.

Hi, thanks, Carl.

Thank you, Carl.

Yes. At this time, we have no further questions. I'd now like to turn the call back over to Mr. Asplund for closing remarks.

Thank you, operator. I'll close by reiterating that we are making great strides in transforming BrightView. The enthusiasm and passion we've talked about is contagious and continues to spread through our organization. When paired with the multiple initiatives underway, this will continue to drive long-term revenue and EBITDA growth. This passthrough will as well transition BrightView from being the largest player in our industry to the biggest and best. With that said, we still have a lot of work to do, but I look-forward to seeing everybody at Investor Day in New York City on February 19 and be safe and we'll talk to you again.