Hello and welcome to the BrightView Fiscal Fourth Quarter Earnings Call. My name is Juan and I will be coordinating your call today. Operator instructions were provided. I will now hand over to your host John Shave, Vice President of Investor Relations to begin. John, please go ahead.

Thank you, operator. Good morning. Before we begin, I'd like to remind listeners 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. For context, BrightView is the leading and largest provider of commercial landscaping services in the United States with annual revenues over two point five billion dollars and seven times our next largest competitor. Together with our legacy companies, BrightView has been in operation for more than eighty years and our field leadership team has an average tenure of more than fourteen years. We provide commercial landscaping services, ranging from landscape maintenance enhancements to tree care and landscape development. We operate through an integrated national service model, which delivers services at the local level by combining our network with more than two hundred and eighty maintenance and development branches with a Qualified Service Partner Network. Our branch delivery model underpins our position as the single source end-to-end provider to a diverse customer base at the national, regional and local levels, which we believe represents a significant competitive advantage. We also believe our customers understand the financial and reputational risks associated with inadequate landscape maintenance and consider our services to be essential and non-discretionary. I will now turn the call over to BrightView's CEO, Andrew Masterman.

Thank you, John, and thanks to all of you for joining us this morning. It is remarkable to consider that we're officially closing BrightView’s fiscal year when we announce our fourth quarter and full year 2021 results. And yet so much of our day-to-day news is still consumed by the COVID pandemic. If you told me at this time last year that we would still be talking about COVID and its immense challenges today, I would not have believed you. And yet, the BrightView team has amazed me every day with their resilience and fortitude. At the end of the day, we are a people business, and I could not be prouder of every single one of my more than twenty thousand BrightView colleagues, who have continued to show up and serve our customers with excellence. Don’t get me wrong, it certainly has not been easy and there have been many challenges. As I mentioned during our Investor Day back in September, BrightView is built on an eighty-year legacy of providing best-in-class landscape and other services to customers across the country. Just as our predecessor companies persevered through multiple macroeconomic disruptions while continuing to deliver significant value to their owners, so will BrightView. Moving to slide four, as I will discuss in more detail in a moment, despite the difficulties of 2021, the BrightView team has accomplished so much while driving strong operational and financial results. We continue to invest in our people and our technology, and we completed eight acquisitions adding close to one hundred and sixty million dollars of annual revenue. Despite labor shortages, our HR team recruited over five thousand new employees. We committed to carbon neutrality by 2035 and so much more. While investing in our future, we were also sharply focused on delivering superior financial results. Additionally, I'm delighted to welcome Frank Lopez to the BrightView Board of Directors. Frank brings a depth and breadth of knowledge and experience to our Board from his many years in an executive leadership role with Ryder System Inc. I look forward to working together with Frank and the rest of the BrightView Board. Our team of more than twenty thousand employees has continued to go above and beyond. Their perseverance made it possible for us to deliver strong Maintenance Land organic revenue growth, and their performance and intense customer focus is why I'm confident in our ability to deliver continued profitable growth. Starting on slide five. First, I'm thrilled to report another solid quarter, led by Maintenance with growth of fourteen point five percent underpinned by nine point two percent of Maintenance Land organic growth. This expansion was driven by continued growth in our Contract business as well as a rebound in ancillary services penetration. This follows Q3 in which we grew organically eleven percent plus, and in Q2 our snow contracts grew ten percent plus. In short, we have grown from fiscal 2019 organic revenue levels despite operating in an environment presented with continued challenges. For the full year, total revenue was a record two point five five billion dollars and adjusted EBITDA increased eleven point three percent to over three hundred and two million dollars. Full year adjusted earnings per share increased approximately thirty-two percent to one point twenty dollars per share, a record for the company. Second, because of the strategic investments we've been making in our sales force, impressive Maintenance Land organic growth trends continued. Our second half of fiscal 2021 Land organic growth of ten point five percent was a result of the continued positive net new sales we discussed over the past few quarters. Third, adjusted EBITDA for the quarter was eighty-nine point five million dollars, which was relatively flat to the prior year. Double-digit growth in our Maintenance segment was offset by softness in the Development segment due to increased inflationary pressure on material spend; more on that later. Fourth, our consistent and predictable free cash flow generation continues to be robust. For the fiscal year, we generated ninety-six point seven million dollars of free cash flow. And finally, the results of our strong-on-strong acquisition strategy benefited our revenue growth by forty-four point two million dollars during the fourth quarter. Our fragmented industry presents many more opportunities for consolidation and you should expect to see M&A execution from us every quarter. Our adjusted EBITDA performance was within the range of the guidance provided during our third quarter call and our revenue was above the top of the guidance range, resulting in a solid finish to the year. Before we turn to the details of our fourth quarter and full year, let me provide you with our outlook for our first quarter of fiscal 2022 on slide six. As expected, we continue to see COVID-19 business impacts specifically related to labor and material costs, but we are optimistic about our ability to deliver solid results. Our Maintenance Land contract-based business is growing and demand for ancillary services is improving. Our primary end markets—homeowners’ associations and commercial properties—remain durable. Hospitality and retail verticals are returning to pre-COVID levels. We are encouraged by what we see happening in the market, and we believe this will result in another quarter of Maintenance planned organic growth of approximately three percent to four percent or more. In our Development segment, we experienced pandemic-related obstacles that impacted project volumes and introduced material cost increases driven by supply chain issues and inflationary pressures, all of which collectively put pressure on revenue and margins. We expect these headwinds to continue in the first half of calendar 2022. With that said, in Development, one external tracker we monitor is the Architecture Billings Index. The ABI is an economic indicator for non-residential construction activity with a lead time of approximately nine to twelve months. The ABI scores over the last eight months continued to be among the highest ever seen in the immediate post-recession periods, underscoring just how strong the bounce back has been following the abrupt downturn in 2020. We are encouraged by the pipeline of work we are all tracking across all markets and our backlogs are robust. Our revenue streams are diversified with a mix of public and private market, owner-direct and general contractor channels and a balanced segmentation of contract sizes. As a result, we remain optimistic that modest organic growth trends in the Development segment should return towards the second half of fiscal 2022 and into fiscal 2023. As such, for our first quarter fiscal 2022, we anticipate total revenues between five hundred seventy million dollars and six hundred million dollars and adjusted EBITDA between forty-four million dollars and fifty-two million dollars. We believe with an average snowfall during the fiscal year, continued salesforce performance and ongoing M&A execution, we will be poised to deliver revenue and margin growth year-over-year. Annual guidance for fiscal 2022 will be provided post our snow season and during our fiscal Q2 report in May. Now moving to slide seven. Let me provide you with a snapshot on how we expect to deliver reliable consolidated annual top line growth. As we shared with you in our Investor Day, we have multiple levers to drive top line growth. The first lever is a dedicated locally-based sales force to generate new sales along with newer technologies to support sales. The second lever is our omni-channel digital marketing to help expand the targeted customer base. The third lever is a continuation of accretive acquisitions as part of our strong-on-strong M&A strategy. Our sales enablement technologies continue to be a differentiator and have supported growth and improved customer retention and satisfaction. BrightView Connect and HOA Connect are our proprietary technologies that allow our customers to review the status of submitted service requests, expedite the response time from BrightView and track the progress of the service requests. Today, we have over one hundred and fifty active homeowners associations on BrightView Connect. Another tool, Quality Site Assessment, is critical to delivering quality services in the field. It allows our account teams to walk alongside customers, collect markup visual feedback, note service priorities and identify additional ancillary opportunities. QSA is a critical enabler that drives value for BrightView team members in the field and was a contributor to the slight uptick in retention. Both of these technology platforms will see 2.0 versions launched in fiscal 2022 allowing for an enhanced customer experience. We also continue to invest in our sales organization, growing our team by over ten percent in fiscal 2021. To drive the success of these expanded sales teams, we remain focused on digital marketing initiatives in new markets through new channels. During fiscal 2021, our lead generation increased forty-one percent and our opportunity pipeline, which are the leads that get further qualified, expanded by thirty-eight percent. Most importantly, as a direct result of our expanded sales teams and sales enablement technologies, combined with our more effective omni-channel approach to digital marketing, our sales pipeline increased forty-one percent year-over-year to over three point seven billion dollars. Prior to the pandemic, the Development segment has proven it can grow consistently in the range of two percent to three percent. Given our backlog and current industry trends as evidenced by the ABI, we remain optimistic that modest organic growth trends should return towards the second half of fiscal 2022 and into fiscal 2023. Turning to slide eight, Maintenance Land organic growth of nine point two percent during the fourth quarter of fiscal 2021 reflects a balanced combination of growth in our contract business, as well as a rebound in our ancillary services realized across all three of our maintenance divisions: Evergreen East, Evergreen West and Seasonal. Additionally, this is the third successive quarter of organic growth in our Maintenance segment, recognizing Q2 snow contract growth. Inclusive of our forecast for the first quarter of fiscal 2022, it represents one full year of primary service line organic growth. Maintenance Land organic revenue for the fourth quarter is now above fiscal 2019 levels and we expect to continue on this trajectory and to be above fiscal 2019 and 2020 levels in fiscal 2022—further proof that our strategy is effective. Our current maintenance trajectory coupled with two percent to three percent acquired growth creates confidence in our ability to deliver at least four percent to six percent sustainable consolidated annual growth going forward. Moving now to slide nine. Since 2017, we have completed twenty-eight acquisitions that position us as market leaders in several key MSAs. We have a dedicated team and a disciplined and repeatable framework. Our acquisitions are accretive and are a value-creating use of free cash flow. Our strong-on-strong M&A strategy leverages our scalable infrastructure while building on best-in-class platforms, processes and people. Our M&A success is core to our top line growth, and we will continue to deliver as we execute on transactions and the strategy we have developed and deployed over the last five years. We expect the eight acquisitions completed during fiscal 2021 to add close to one hundred and sixty million dollars of incremental annualized revenue. Fiscal 2021 has been a record year for M&A and we still have attractive opportunities in our pipeline which continues to develop. The acquisitions of WLE based in Austin, GTI based in Las Vegas, and Bay Tree based in Atlanta reflect our refined strong-on-strong acquisition strategy and expanded ability to operate in the high-growth housing development market, which benefit both the Maintenance and Development segments. We expect to leverage these acquisitions, which will allow us to further penetrate or enter large MSAs with high-growth housing markets across the country during fiscal 2022. Turning to slide ten. Despite operating in an environment presented with continued challenges, such as labor availability and wage inflation, materials cost escalation and supply chain constraints, we have a pathway to consolidated margin improvement. In fiscal 2021, we delivered eleven point eight percent consolidated margins, that's a twenty basis point improvement over fiscal 2020 in a very challenging environment. We believe there is a credible path to thirteen percent consolidated margins over the next several years achieved through the following actions. First, in our Development segment, we are confident we can begin to return to historical margin performance by fiscal 2023 and drive leverage through our cost structure. Next, our continued focus on pricing and productivity: we have initiated a proactive pricing strategy that we believe will help us to offset challenges with labor and material costs and is structured to begin to deliver margin improvement in fiscal 2022. Third, a continued rebound and focus on ancillary services. Ancillary delivers higher margins and is key to consolidated margin expansion. We are also realistic about the labor pressures impacting BrightView and other companies in the service industry and are aggressively pursuing initiatives to mitigate the impact. John will expand upon this in his comments. Turning to slide eleven. We continue to be leaders in environmental, social and corporate governance, or ESG. We truly embrace our ESG strategy that is embedded into our corporate foundation and culture. The E element of ESG is the assessment of how BrightView interacts with our natural surroundings and how we perform as a steward of the physical environment. The E takes into account our utilization of natural resources and the effect on the environment, both on direct operations and across our supply chains. BrightView is actively engaged in ways to practically address environmental responsibility and achieve carbon neutrality; a few of these are highlighted on the slide. First, a cleaner fleet. BrightView is reducing emissions and is beginning to supplement our fleet with electric vehicles. To reduce our fuel use and minimize our carbon impact, we have begun by planning to deploy over five hundred electric vehicles over the next twelve to twenty-four months. Furthermore, by 2027, we expect to convert one hundred percent of our management vehicle fleet to electric or hybrid. Approximately thirty percent of our eleven thousand vehicle fleet will be converted by 2027. Second, greener equipment: we are transforming our mowers and two-cycle equipment to sustainable power. We plan to aggressively convert all fifty thousand pieces of two-cycle equipment to electric and sustainable energy, resulting in a fifty percent reduction of BrightView’s carbon impact according to our internal estimates by the end of 2025. Third, efficient buildings: BrightView strives to improve energy efficiency and convert to green energy. Fourth, sustainability: BrightView is committed to sustainability. We continue to proactively and purposefully plant one hundred thousand trees per year and we intend to double those efforts. By 2030, we intend to plant upwards of two million trees. A mature tree absorbs carbon dioxide at a rate of forty-eight pounds per year. In one year, the two million trees BrightView intends on planting will offset the CO2 produced by approximately seven thousand vehicles. We are also transitioning our fertilization efforts to organics, as well as continuing to invest in irrigation technology with a focus on water conservation. We will continue to reduce pollution and implement green energy as a way of reducing, sequestering and minimizing our carbon footprint. Turning to slide twelve. This is a rendering of BrightView’s branch of the future. As you look at this, you see solar panels on every roof, you see covered parking areas where our trucks are parked and charging at our electric charging stations. You see wind turbines in the background providing energy to our internal shops that are charging our lawnmowers and hand-held equipment. You see bicycles our team can ride to and from work, and the trees and greenery surrounding our branch. In the three hundred parcels of real estate we currently own or lease, we will implement alternative and solar energy solutions and replace outdated energy equipment and appliances where possible; we will convert all electric service to our buildings to sources of alternative energy. We intend to launch a pilot branch in fiscal 2022. Back in October, while visiting a branch in Denver, I witnessed one of BrightView’s initial all-electric crews. We are currently maintaining a landscape for the town of Superior in Boulder County and helping them achieve their sustainability goals to reduce greenhouse gas emissions by at least twenty-five percent. Landscaping is going electric and the revolution is here to stay. Additionally, we expect the recently passed Infrastructure Bill, of which forty percent of funding is for climate and clean energy investments, will support our efforts in landscaping and infrastructure. BrightView is already having productive and proactive conversations with manufacturers that are supportive of our environmental strategies and with municipalities to help them secure funding and credits. Although capital investments will be required to build our electrical infrastructure, we do not expect there to be significant incremental CapEx to fund this buildout until the back half of the decade. Furthermore, any additional spending will generate fuel and other savings resulting in an attractive return on investment. We expect to reduce our fuel consumption by approximately ninety percent by 2035 and additionally, we expect to decrease our equipment maintenance cost by upwards of fifty percent annually. The result of our efforts is an expectation of BrightView to be approximately seventy-five percent carbon neutral by 2030 and to achieve carbon neutrality by 2035. Most excitingly, BrightView as the leader has a unique ability to change our industry. We look forward to continuing to work with our partners and customers in our efforts to achieve carbon neutrality. We're in the early innings of our journey, and during calendar 2022, we plan on issuing a formal sustainability report. This will allow BrightView to report on environmental and social performance as well as publish ESG goals. I'll now turn it over to John, who will discuss our financial performance in greater detail.

Thank you, Andrew, and good morning to everyone. I'm pleased with the strong results we delivered in our fourth quarter and during fiscal 2021. We remain focused on our key investment pillars of organic growth, margin enhancement over time, mergers and acquisitions, and cash generation. We built the foundation and strategy to deliver consistent land organic growth quarter-after-quarter. In Q2 of this year, we realized ten percent plus of snow contract growth and then delivered eleven point seven percent and nine point two percent of land organic growth in the third and fourth quarters of fiscal 2021. This resulted in full year Maintenance Land organic growth of three point seven percent. More importantly, we are well positioned to continue this into fiscal 2022 and beyond. In addition, we have a very consistent and resilient free cash flow generation model, which as I discussed at Investor Day is a key driver of value for BrightView. Since fiscal 2018, we have delivered approximately half a billion dollars of free cash flow and have maintained a steady cash conversion ratio of approximately eighty percent. The key is deploying capital prudently and getting accretive returns. We will continue to deploy our capital for accretive M&A and to deleverage our balance sheet. With that, let me provide a snapshot of our fourth quarter results. Moving to slide fourteen. Fourth fiscal quarter 2021 revenue for the company increased ten point eight percent to six hundred and seventy-three point seven million dollars in the current quarter, from six hundred and eight point one million dollars in the prior year. Maintenance revenues of five hundred and four point five million dollars for the three months ended September thirty increased by sixty-three point eight million dollars or fourteen point five percent from four hundred and forty point seven million dollars in the prior year. The increase in maintenance was driven principally by strong contract growth as well as a continued rebound in our ancillary services, which led to nine point two percent organic growth. Additionally, we realized twenty-four million dollars of incremental revenue from acquired businesses. For the three months ended September thirty, development revenues increased one point eight million dollars or one point one percent to one hundred and seventy point two million dollars from one hundred and sixty-eight point four million dollars in the prior year. The modest increase was driven by the contribution of acquired companies. We are encouraged by our bidding pipeline and bid calendar and we anticipate increased stability during the second half of fiscal 2022. Turning to the details on slide fifteen. Total adjusted EBITDA for the fourth quarter was eighty-nine point five million dollars, relatively flat compared to ninety million dollars in the prior year. In the Maintenance segment, adjusted EBITDA of eighty-seven point one million dollars was up thirteen point one percent or ten point one million dollars from the prior year. Solid contract growth and a continued rebound in our ancillary services drove the increase. Adjusted EBITDA margin of seventeen point three percent was down slightly from seventeen point five percent in the prior year, but more importantly showed a thirty basis point improvement over the pre-COVID fourth quarter of fiscal 2019. In the Development segment, adjusted EBITDA decreased seven point nine million dollars to eighteen point six million dollars compared to twenty-six point five million dollars in fiscal Q4 of 2020. The decline was driven by lower organic revenues and higher material costs as a percentage of revenue. Adjusted EBITDA margin of ten point nine percent was a reduction compared to prior year levels. For fiscal Q4, corporate expenses represented two point four percent of revenue. Now let me provide you with a snapshot of our results for the full fiscal year of 2021 on slide sixteen. Total revenue for the company increased eight point eight percent to two point five five billion dollars from two point three five billion dollars in the prior year. In the Maintenance segment, fiscal year revenues were one point nine eight billion dollars, a two hundred and fifty-three point five million dollar or fourteen point seven percent increase versus fiscal 2020. The improvement was driven by strong organic growth, contract growth and snow removal services, higher snowfall and revenue contribution from acquired businesses. In the Development segment, fiscal year revenues were five hundred seventy-four point nine million dollars, a forty-five point four million dollar or seven point three percent decline versus fiscal 2020. The decline was primarily driven by project delays and a reduced backlog, which was partially offset by revenues from acquisitions. Now turning to slide seventeen. Total consolidated adjusted EBITDA for the fiscal year increased thirty point seven million dollars or eleven point three percent to three hundred and two point three million dollars compared to two hundred and seventy-one point six million dollars in the prior year. The improvement was primarily driven by strong execution from the Maintenance segment. The Maintenance segment's adjusted EBITDA grew twenty point five percent to two hundred and ninety-nine point six million dollars compared to two hundred and forty-eight point seven million dollars in the prior year. Strong double-digit organic growth in the second half of fiscal 2021, ten percent plus contract growth in Snow Removal Services, higher snow volume and solid cost management drove the adjusted EBITDA expansion, which resulted in fiscal year consolidated EBITDA margin improvement of seventy basis points to fifteen point one percent. As a result of inefficiencies driven by project delays, lower project volumes and higher material costs, adjusted EBITDA for the Development segment decreased twenty point one percent to sixty-five point two million dollars compared to eighty-one point six million dollars in the prior year. For the full year, corporate expenses were two point four percent of revenue which has held steady for the past several years. Let's move now to our balance sheet and capital allocation on slide eighteen. Net capital expenditures totaled fifty-one point seven million dollars for the fiscal year ended September thirty, up from forty-seven point nine million dollars in fiscal 2020. Expressed as a percentage of revenue, net capital expenditures were two percent in fiscal year 2021 and fiscal year 2020. Like many firms, we faced supply chain constraints pertaining to our equipment orders, combined with multiple years of below-historical-average capital spending, continued growth in the Maintenance segment and costs associated with our ESG initiatives. We anticipate capital expenditures will be approximately three point five percent of revenue for fiscal 2022, which is within our historical guidance range. In fiscal year 2021, we invested one hundred and ten point four million dollars on acquisitions versus ninety point three million dollars in the prior year. Net debt on September thirtieth of 2021 was one point zero five six billion dollars compared to one point zero one five billion dollars at the end of the prior year. Our leverage ratio was three point five times at the end of the fourth quarter of fiscal 2021, down from three point seven times at the end of fiscal 2020. For fiscal year 2021, free cash flow was ninety-six point seven million dollars. As we continue to focus on cash generation and diligently manage our working capital. An update on liquidity is on slide nineteen. At the end of fiscal 2021, we had approximately two hundred and eight million dollars of availability under our revolver, approximately seventy-five million dollars of availability under our receivables financing agreement and one hundred and twenty-three point seven million dollars of cash on hand. Total liquidity as of September thirty, 2021 was approximately four hundred and six point four million dollars. This compares to three hundred and eighty-nine point one million dollars as of September thirty, 2020 and provides us with ample flexibility and optionality. Before I turn the call over to Andrew for closing remarks, on slide twenty, I would like to address labor and pricing—two topics that I suspect are on the minds of many of you on this call. We are in a difficult inflationary environment, but let me share with you how we are actively mitigating these headwinds. Due to the nature of our business, we hire approximately five thousand new employees each spring. Despite challenges in a tough labor environment, we successfully executed on that again in 2021. We witnessed higher wage inflation of about seven percent versus about four percent wage inflation historically, and that has put pressure on our business. However, we have taken proactive actions against that. We have implemented multiple pricing initiatives as we head into fiscal 2022. Our teams are collaborating with customers to help them understand how wage inflation is impacting our business and ensuring we balance our scope of work. As we come into our contract renewal period, these are the types of candid and transparent conversations we are currently having with our customers. Driven by inflation, material price increases have put pressure on the development business over the past few quarters and will continue to impact margins through mid-summer. To address this going forward, we have shifted to allowing ten to fifteen days of pricing commitments in our contracts as opposed to contracts that were historically fixed by three to six months or occasionally longer lead times. We are confident that the materials input inflation that has put short-term pressure on the business is transitional, and importantly that our efforts will help to offset these headwinds. With that, let me turn the call back over to Andrew.

Thank you, John. In summary, here are the key takeaways on slide twenty-two. First, in the market, BrightView is the number one player in a seventy billion dollar fragmented market. As landscapers, we manage living assets resulting in a resilient market. Additionally, we continue to see signs in all Maintenance verticals that the impact of the pandemic is subsiding and business is recovering. Second, growth: Maintenance Land growth trends continue as our investment in our sales team is driving sustainable organic growth. Today, we have over two hundred sales leaders and business developers to drive new business opportunities through strategic partnerships at both the national and local levels. Combined with our omni-channel approach to digital marketing, we have improved our retention modestly and increased our sales close rates, while growing our sales pipeline in all markets. Third, technology: we continue to deploy best-in-class customer engagement and operational management solutions; our technology is successfully enhancing productivity, profitability and client engagement. We recently kicked off a next-generation investment in BrightView Connect 2.0, which will deliver highly requested enhancements for our customers in 2022. Our investment in BrightView Connect 2.0 and other technological capabilities such as QSA 2.0 will continue to differentiate BrightView’s digital capabilities with new features and improve the customer experience and retention. Fourth, sales and marketing: in addition to technological enhancements, we continue to grow and invest in our sales organization and expand the use and effectiveness of our sales tools. The result is increased efficiencies while positioning us to continue to deliver profitable growth. This improved productivity should lessen the need to expand the sales force at the same rates as the last several years. Our sales and marketing strategies and structure are a formula for long-term success. Fifth, M&A: the results of our acquisition strategy continued to benefit our revenue growth and with an attractive six hundred million dollar pipeline, acquisitions will continue to be a reliable and sustainable source of growth. Our business is cash generative with low capital intensity allowing us to consolidate the marketplace in an efficient and disciplined manner and we have proven to be repeatable. For fiscal 2022, we have identified six target MSAs that present principal accretive opportunities to expand in new markets and existing markets. And sixth, cash: at the end of the fourth fiscal quarter, our leverage ratio continues to be at a historic low for BrightView. We continue to generate significant cash and we'll focus on reducing our leverage ratio, driving profitable growth through M&A and potentially looking at other ways to return capital to shareholders. Fiscal year 2021 was an unprecedented environment that few have ever experienced. What the BrightView teams accomplished in the face of a pandemic is simply amazing. We are extremely grateful for first responders and healthcare professionals, each of whom bore the greatest burden. We also want to personally thank each and every member of our dedicated teams—our gardeners, account managers, business developers and branch leadership. I thank you. Also, thank you to all BrightView customers and partners for your resiliency and commitment during a challenging time. Our focus on taking care of each other and our customers and taking pride in how we deal with our clients and the beauty of their properties that we design, develop, maintain and enhance has sustained our organization. We will continue this focus on our people and our culture to deliver confidence in the future that lies ahead. Thank you for your interest and your attention this morning. We'll now open the call for your questions.

Operator instructions were provided. And our first question comes from George Tong from Goldman Sachs. George, your line is now open.

Hi. Thanks. Good morning. Wage inflation has stepped up to seven percent from historical levels of four percent. You mentioned balancing the scope of work with clients to adapt. How much do you expect pricing to increase by on an absolute basis in fiscal 2022 in response to the higher wage inflation? And when would you expect the pricing increases to balance or perfectly offset the wage increases and input cost increases overall?

Yeah. Good morning, George. As we look forward, we're beginning our pricing discussions with the customers. So within landscaping, those discussions come now—October, November, December all the way through, frankly into early May when we’re talking with all our customers. The degree to which we get the pricing in our actual top line versus our scope reductions is something that we're going to be in constant conversation with our customers about. We're trying to really understand the dynamics they have while also acknowledging the pressures that we have within labor and materials. So, I don't know exactly yet, but I will say that this year we will probably see at least one percent to two percent on the revenue side somewhere in that range, which we have typically not seen in the past with the scope reductions or scope adjustments. But we really won't have a definitive level of top-line impact until we finish the pricing negotiations and contract renewals that occur through the beginning of May.

Okay. Got it. That’s helpful. And then with respect to your guidance for fiscal 1Q, you're pointing to organic revenue growth in the maintenance business of three percent to four percent. The prior year comps are relatively easy. Are there any factors that are currently preventing growth in fiscal 1Q from being even higher than what you're guiding to?

It really comes down to how much ancillary revenue gets pulled through. We're only in the early parts of November right now and seasonally it can be a more challenging period because the weather gets a little colder. So we still have a little less ancillary pull-through than we typically have. But really that variance comes through at that level. And yes, there is potential that the three percent to four percent could be higher; it's just a little too early to tell.

Got it. Thanks very much.

Our next question comes from Andy Wittmann from Baird. Andy, your line is now open.

Yeah. Great. Sorry, I've got more than two questions. I'm trying to figure out which ones I want to do. All right. So, let's talk about ancillary. Can you talk about what the performance on ancillary in the quarter was compared to pre-COVID levels? In other words, I'm trying to get a better sense of how far back that run rate is today and how much further there is to go?

Andy, good morning. When you look at the detail between both contract and ancillary in the fourth quarter versus the same period of 2019, we're ahead on the contract side modestly by about one percent to two percent. And on the ancillary we are still slightly behind where we were in the fourth quarter of 2019, but we're still positive net when you combine both ancillary and contracts for the quarter versus 2019. So good results on the contract side and getting very close on the ancillary side.

Got it. Okay. For my follow-up, I wanted to talk about some reconciling items in free cash flow, in particular the COVID cost that you called out in the quarter as well as the IT integration costs. COVID is kind of subsiding yet your number, the cost that you are excluding, is still relatively high; in fact it's a little bit higher. So, I wanted to understand if there is something in there that was one-time-ish or what the expectation is on a go-forward basis for those costs in 2022. Then similarly with the IT cost, you guys have been running three million to four million dollars per quarter for almost every quarter for two years. When do you expect the IT spend to reduce substantially or go away?

Yes, sure Andy. The breakout of the non-recurring in the fourth quarter—about half of that is business transformation and integration costs. The other half is COVID. We saw a slight uptick in the quarter driven by the Delta variant. Like all companies, we don't know exactly when that's going to subside, but we would expect that to subside on a quarterly basis as we get into fiscal 2022. On IT and infrastructure, there are several technology initiatives that we have discussed, among them continued work on another version of our ERP going to 2.0, the Salesforce and CRM. We expect those, like COVID costs, to certainly slow down as we head into 2022.

Andy, I'll make one comment on the Coronavirus impact. We continue to quarantine anybody in the company who has exposure; anyone who has COVID. That's the predominant expense we have there. In Q4 we didn't see a slowdown; in fact we saw an increase in case load. We are seeing a reduction now in November, but it increased pretty significantly in the July through December time period and that's what really drove that cost.

Got it. Okay.

Our next question comes from Shlomo Rosenbaum from Stifel. Shlomo, your line is now open.

Okay. Thank you for taking my questions. You mentioned that you're looking at potentially other ways to return capital to investors. Do you mind expanding on that? Would you consider a share buyback or introducing a dividend, maybe a variable dividend depending on how snow comes out during the year? Could you expand on that?

Yeah. Sure, Shlomo. That comment really carries off what we talked about at Investor Day, which is that going forward, depending on where we feel the share price trades, we would possibly enter into some form of share buyback. We have not executed that yet, but we want to continue to be available to make that decision if we deem it best for the company. So that's really what that relates to.

Okay. And then how much in total do you plan to spend on your ESG initiatives in fiscal 2022 that are going into the CapEx number?

When you talk about fiscal 2022 impact, it really comes down to incremental electric vehicles and the incremental cost associated with those EVs—over five hundred vehicles is the main number. We're talking about a premium somewhere between five thousand dollars to seven thousand dollars per vehicle. So that's kind of the total impact. The brands that we are intending to outfit in 2022 will be consumed in the normal CapEx. John, do you want to add anything?

And Shlomo, I would add that we have a lot of opportunity in handheld two-cycle equipment and that's going to be like-for-like essentially. There's not a lot of cost differentiation today between gas and electric handheld and that's fertile territory for us to get traction on ESG.

Is there any difference in functionality of the two-cycle electric equipment? Why didn't you do it beforehand—what was the tradeoff?

What's happened in the last couple of years is increased battery performance of the two-cycle equipment, which allows us to actually have duty cycles that last longer. That was the limiting factor before. If you think a blower might have had a thirty to forty-five minute battery cycle in the past, now some backpacks extend into a couple of hours or even three hours. That reduces swaps and allows two or three changes a day rather than eight a day. Battery life and technological advancements are driving the ability to move forward, and we believe those advancements will continue over the next several years allowing us to achieve our goals.

Great. Thank you.

Our next question comes from Tim Mulrooney from William Blair. Tim, your line is now open.

Andrew, John, good morning.

Good morning.

Good morning, Tim.

So it looks like EBITDA margins are expected to step down in the first quarter similar to what we saw in the fourth quarter. Based on all the mitigation actions in your prepared remarks, when would you expect that margin headwind to turn to tailwinds? Is that a back half of 2022 thing, in line with the improvement in your development business? Or is it more of a 2023 expectation at this point?

Yes, Tim, the first and largest driver is the Development side of the business. When we entered into many contracts nine months ago, certain material costs were fixed in those contracts. With the inflationary pressures now, those material costs are significantly higher. We are quite booked right now into Q1 and Q2 and partially into Q3 with contracts that may have been priced earlier. As we book into Q3 and Q4 with more current costing and current contract structure, we believe we will see a turnaround in the Development segment as we get into Q3 and more so into Q4 and then forward after that.

That's really clear and helpful. My second question is on your branch of the future: how do you think about the unit economics? With a ninety percent fuel reduction, fifty percent reduction in maintenance costs and other energy savings from solar panels, it seems unit-level economics would look very different. How could that impact your thirteen percent long-term margin outlook?

Great question. We're very optimistic about the long-term economics. Fuel is one of our major inputs, and moving away from fuel will significantly reduce costs and volatility around fuel prices. The investments in the branch of the future, from a fuel perspective alone, will drive significant return on investment which will improve our overall margins. It won't happen tomorrow because most of our trucks are heavy-duty vehicles and the ability of electric trucks to tow trailers and carry heavier equipment isn't broadly available in 2022. But we believe, after talking with multiple heavy-duty truck manufacturers, that as we get into the second half of the decade, the technology will become available and usable for us and we'll start seeing that return as we move into that period.

Okay. Thank you.

Our next question comes from Brendan Popson for CJS Securities. Brendan, your line is now open.

Hi, good morning. This is Brendan on for Bob. Just wanted to ask about the labor issue and your contracts: how is it impacting your contract negotiations up to now? And could you dive into the ten to fifteen day shortened pricing commitment—give us more detail on what that means versus your historical norm?

Regarding the ten to fifteen day pricing commitment: historically we had contracts where pricing could be fixed for three to six months or even longer. Over the last four to five years we had little material inflation, so that worked. With the current inflationary pressures, we've shrunk that down—this is happening in the Development segment. We're saying you can only hold a quote for about one to two weeks; if you come back after that period the pricing is no longer valid and we would need to redo the quote. Once we win those contracts, we take the material levels in those bids and match them with purchase orders we send to our suppliers. That reduces our exposure to material cost swings.

Great. And following up, you talked to a lot of companies with your M&A pipeline. What are you hearing from them about pricing? Are some of those smaller guys getting squeezed? What are you hearing across the industry as everyone renegotiates contracts and looks at pricing?

There are unquestionably several smaller players out there that are struggling significantly on the pricing side, especially the smaller ones. If you're a smaller player and you need to negotiate additional price, they're having difficulty if they're locked into long-term contracts. This has put stress on the industry and the industry knows that this pricing activity is going to continue and customers will need to expect these changes.

Great. Thank you.

Our next question comes from Andrew Steinerman from JPMorgan. Andrew, your line is now open.

Hi, Andrew and John. Two questions. First, on seasonality on the maintenance side: after the first fiscal quarter you just guided for, help us think about sequential organic revenue growth for maintenance—should we expect normal seasonality given the easier first-quarter base, or might we see better-than-normal seasonality because there's still a rebounding nature to the Maintenance business? I have a second question after that.

When you look at overall growth in the Maintenance segment, the investments we've made in our sales team will continue to drive contract growth. What seasonality will reflect is how much ancillary growth pulls through. In the winter months—our Q1 and Q2—we'll have tempered seasonal growth since we have a good portion of the contract maintenance in place, and then you would expect to see higher-than-average growth in Q3 and Q4 as ancillary normalizes.

John, thinking about revenue that's still being dragged by COVID on both the maintenance and development side: when that revenue comes back, do you have a sense of the incremental margins on that rebounding revenue?

We are working hard on the maintenance side. I gave the measurement of our results in Q4 versus 2019 and we were encouraged by that thirty basis point incremental improvement in maintenance. We are moving aggressively on pricing and managing labor aggressively. For maintenance, the material component of the P&L is smaller than development, so it's less of a headwind. We're encouraged and confident that we can see continued incremental improvement, particularly in the back half of the year.

And regarding margins, in Q3 and Q4 you'll see the double impact of pricing initiatives that we're putting in place, which should help margins, and also a rebound of ancillary as it normalizes toward pre-COVID levels.

Okay. Thank you.

Operator instructions were provided. Our next question is a follow-up from Shlomo Rosenbaum from Stifel. Shlomo, your line is now open.

Hi. Thank you for sneaking me back in. I want to clarify something I didn't catch well in the call. You said something about acquisitions in higher-growth housing markets—could you clarify what you're referring to in terms of higher-growth housing markets?

Yeah, absolutely Shlomo. If you look at three acquisitions we've done—Bay Tree, GTI and WLE in Austin, Las Vegas and Atlanta, and also in Charleston—these are good housing markets. Historically we've had less activity in our Development segment focused on housing. These acquisitions have introduced us into housing development markets, working on new developments for landscape construction in those markets. They also allow us to have pull-through with maintenance contracts at those development projects once the housing developments are complete. We've launched initiatives in several new markets and are starting to see good traction with learnings from those M&A acquisitions.

Are these like condos—more HOA-based? What kind of pull-through activity is there after the initial landscaping of residential homes?

Yes, HOAs. When you develop a new homeowners association you have the infrastructure maintenance, and often the front yards are maintained under an HOA contract, so the HOA dues cover front-yard maintenance. That means dealing with one customer, the HOA, rather than many individual homeowners. Using HOA Connect and BrightView Connect for service ticket management helps residents communicate performance through the HOA, and that structure lends itself well to push into that segment. We're seeing positive initial signs in a couple of new markets.

Got it. Okay. And one more: could you break down the COVID costs year-over-year—the eight point eight million dollars you called out—and explain what the costs are on the ground? What are you spending the money on?

The biggest part, Shlomo, is paid time off (PTO) for employees who are ill or quarantined. With the Delta variant there was another resurgence. In Q4 the biggest chunk was PPE—masks, gloves, sanitizers—because we have so many people in the field and an extensive branch network. The other big driver was PTO and sick pay for folks. Those were the predominant costs we saw. They were up slightly versus Q4 of last year, but over the year we had about seven point five million dollars in Q1, tapered down in Q2 and Q3, and then ramped up again because of the variant. We are hopeful they will go down.

Okay. Thank you.

We have no further questions. I will now hand it back over to Andrew Masterman for any final remarks.

Thank you, operator. Once again, I want to thank everyone for participating in the call today and for your interest in BrightView. We look forward to speaking with you when we report our first quarter results. Stay safe and be well.

This concludes today's call. Thank you for joining. You may now disconnect your lines and enjoy the rest of your day.