Earnings Call Transcript - BV Q4 2023

Operator, Operator

Hello, everyone, and welcome to the BrightView Fourth Quarter Fiscal Year 2023 Earnings Call. My name is Bruno and I'll be your host for today. Now, I’ll turn it over to Chris Stoczko. Please proceed.

Chris Stoczko, Host

Good morning and thank you for joining BrightView's Fourth Quarter and Full Year 2023 Earnings Call. Dale Asplund, BrightView's President and Chief Executive Officer, and Brett Urban, Chief Financial Officer are on this call. I will now refer you to Slide 2 of the presentation, which can also be found on our Investor Relation Website and which contains our safe harbor disclaimer. This call may include forward-looking statements that are subject to certain risks and uncertainties. In addition, during this call we will refer to certain non-GAAP financial measures. Please see our 8-K issued earlier this morning for reconciliation of these non-GAAP financial measures. I will now turn the call over to Dale.

Dale Asplund, CEO

Thank you, Chris and good morning, everyone. I'm honored to join my first earnings call since being appointed BrightView’s CEO in October. First, I want to thank all our employees for their efforts this past year. I'm proud to be joining a team that is motivated and committed to continuous improvement. In my first 45 days, I spent a lot of time in the field and at the branches, meeting employees and customers, immersing myself in all aspects of BrightView's business. I have benefited greatly from these interactions as they are opportunities to listen, to learn, and to build relationships. I look forward to meeting many more of our associates and partners in the weeks and months to come. I will begin today's call on Slide 4 by sharing some initial observations about the areas we’re focused on and some of my initial priorities. I will then provide some highlights for fiscal year 2023 before handing over to Brett to discuss our results in more detail and provide our initial outlook for fiscal 2024. By way of background, I spent the past 25 years at United Rentals, the world's largest equipment rental company. In my most recent role as COO, I was focused on relentless execution and delivering exceptional customer experience. This was accomplished by prioritizing our employees so they are equipped with appropriate resources to serve our customers while leveraging the size and scale of the business. By doing this, we can significantly increase shareholder value. What attracted me to BrightView was the opportunity to meet a group of talented employees through their next stage of profitable growth and operational improvement by leveraging my experience as an operator and leader. At BrightView, we have a tremendous opportunity ahead of us to become great operators of our business and partners to our customers. To capitalize on these opportunities and propel BrightView into the next stage of growth, we must invest in our employees and prioritize our relationships with our customers while delivering effective execution and service. We will do this by everyone working together to operate as One BrightView. As CEO, I am focused on establishing a unified Brightview, a company that prioritizes its employees, the customer, and a winning culture. This renewed commitment and investment in the business will be critical to our ability to drive profitable growth. It will also allow us to leverage our vast branch network to drive operational efficiency. Another key area of focus will be the strategic allocation of capital, ensuring that our investments in the business, both organic and inorganic, are creating value and generating attractive returns for our stakeholders. Moving to Slide 5. The initial goal of operating as One BrightView is to become the employer of choice. We do this by putting our employees first and by delivering a culture where people seek to achieve individual and group success. By prioritizing our employees, we ensure that they have the capabilities and tools required to do their jobs at a high level. Doing this materially impacts the level of service provided to customers and leads to an exceptional customer experience. This includes investing in employee safety, fleet, and systems, all of which will allow us to better serve our customers. By making these investments in our employees and, in turn, having employees take care of our customers, we will become the partner of choice in our industry. These investments aim to improve customer retention and accelerate profitable growth. Creating a customer-centric focus for our employees is critical to our objective under One BrightView. As you can tell, we are highly focused and committed to One BrightView and building a stronger foundation. There is a lot of work ahead of us on these initiatives, but I firmly believe these are the areas we must prioritize. Once we have established this foundation, we will have earned the right to expand strategically. M&A can be a powerful lever for growth and generate meaningful returns on capital, but only when it fits strategically, culturally, and financially. In order to have that fit, we must be better owners that accelerate revenue, increase operational efficiencies, and create significant synergies. So that one plus one equals three. As One BrightView, we have to be the best at what we do for our customers, and I’m confident that we can deliver on these goals. Now moving to our results. As you can see on Slide 6, fiscal 2023 was a successful year for BrightView as we achieved solid execution and delivered results in line with expectations. During the year, we focused on targeting profitable growth, driving consistent EBITDA margin expansion and improving our cash flow. We were pleased with the results for the year considering the challenging economic environment, consisting of elevated inflation, higher interest rates, and a winter with very little snow. Despite these challenges, we executed our plan for the year. Additionally, during the year, we achieved a transformational reduction in our leverage, driven by the strategic investment from One Rock Capital and our improved profitability. As shown on Slide 7, prior to One Rock, our leverage profile and interest expense payments were restricting our growth in cash flow and reducing the overall financial flexibility of the business. By partnering with One Rock, we were able to use those proceeds to pay down debt, resulting in a significant reduction in our leverage and interest expense. This added flexibility allows us to invest in the business with an emphasis on profitable growth. In addition to the financial benefits of this partnership, we are also leveraging One Rock's operational expertise, including previous experience in our industry, which will allow us to accelerate the execution of our strategy. The investment also reflects a strong vote of confidence in BrightView's strategy and potential to drive profitable growth for years to come. With that, I'll turn it over to Brett, who will discuss our financial performance and outlook in more detail.

Brett Urban, CFO

Thank you, Dale, and good morning to everyone. I'll start on Slide 9. I am pleased to report on another solid quarter. We grew total revenues by 2.8%, increased EBITDA by $10 million, delivered margin expansion in all segments, and generated significantly more cash despite increased interest expense. Our ability to achieve these results reflects BrightView's attractive business model and gives us confidence as we pursue new opportunities to drive further financial and operational improvement. Moving to Slide 10. Total revenue during the quarter increased 2.8% year-over-year to $744 million, reflecting 2.1% year-over-year organic revenue growth. Revenue during the quarter benefited from demand in our core businesses, favorable pricing, and M&A contribution. In our Maintenance business, total revenue decreased 1.5% to $521 million as we continue to pursue higher quality contracts, which reflects our relentless focus on profitable growth and margin expansion, as we discussed last quarter. We grew our Development business a robust 13.5% organically, due to our ability to convert our strong backlog into higher project volumes. We remain very optimistic about the pipeline of projects and the momentum of our Development business headed into fiscal '24. Turning now to profitability and the details on Slide 11. Total adjusted EBITDA for the fourth quarter was $101.6 million, an increase of $10 million driven by both land and development growth, margin expansion in all segments, and a strategic asset sale, which came in above expectations. In the Maintenance segment, total adjusted EBITDA of $81.7 million was up slightly year-over-year. This resulted in margin expansion of 30 basis points and marks the fourth consecutive quarter of margin expansion in our core land business. As I mentioned, our focus on higher quality contracts led to a modest near-term impact on land revenue, but as evidenced throughout this year, this strategy led to continued profitability growth and margin expansion. In the Development segment, adjusted EBITDA for the fourth quarter was $29.1 million, an increase of approximately 14% compared to the prior year. Adjusted EBITDA margin expanded 10 basis points, which marks our fifth consecutive quarter of Development margin expansion, and we expect this trend to continue as we head into fiscal '24. As part of our ongoing initiatives, we executed a strategic sale of our corporate airplane that generated both cash and future cost savings. This sale benefited profitability and cash flow, which allowed us to immediately reinvest back into the business by replacing some of our oldest production vehicles. Important to note, in our previous guidance, we assumed an approximate $4 million EBITDA benefit from selling the airplane in our corporate segment. Through favorable negotiations, we were able to secure an approximate $7 million benefit to EBITDA on the sale of this asset. Lastly, the sale had both a positive impact on our corporate and environmental initiatives. Turning to Slide 12. I'll provide you with our full fiscal year '23 results. Total revenue for the year was $2.82 billion, which represented a 1.5% increase compared to the prior year. Total land services increased 1.7% to $1.86 billion, reflecting healthy growth despite the contraction in our noncore business. Additionally, snow represented a year-over-year headwind of $47 million due to the absence of material snowfall. Revenue in the Development segment increased a meaningful 8.5%, with robust 6.8% organic growth for the full year. As you can see on Slide 13, we delivered EBITDA growth and margin expansion throughout the year. We're committed to growing profitability and expanding margins in fiscal '23, and we are proud to report that we delivered on these commitments. I am extremely delighted with the team's ability to execute this growth and margin expansion despite the challenging operating environment. Let's now turn to Slide 14 to review our free cash flow, debt, and capital expenditures for the year. We committed to improving our cash flow in fiscal '23 and delivered upon this commitment. This improvement was a result of higher profitability, a strategic reduction to capital expenditures, favorable working capital, and benefits from our tax planning, which more than offset the higher cash interest expense in the year. The reduction in capital expenditures reflects the resiliency and flexibility of our balance sheet in the year with low snowfall. For the full year, we generated $80 million in free cash flow compared to $7 million last year. These levels of cash generation reflect improvements in our business and laid the foundation for continued momentum going into fiscal '24. In addition to the improved cash levels in the business, we announced a strategic investment from One Rock Capital that contributed to a significant reduction of our leverage profile. This investment resulted in leverage coming down by approximately 2 turns, reaching a historical low of 2.9 times compared to the 4.8 times in the prior year. This strengthens our balance sheet and provides us with flexibility and the opportunity to reinvest in the business, specifically towards customer and employee satisfaction, which, as Dale mentioned, will lead to profitable growth and operational improvement. Let's now turn to Slide 15 to provide an update on Project Liberty. As a refresher on our Q3 earnings call, we announced an expanded strategic review of our business beyond just cost initiatives. These initiatives include areas such as branch performance, customer growth and retention, procurement, and capital allocation, with a collective goal of expanding profitable growth and generating higher returns. We have seen the early successes of these initiatives reflected in our EBITDA margin and cash flow performance in the back half of the year. Under Dale's leadership, Project Liberty continues to take shape across the business and has aligned with our goal of becoming a collaborative and unified One BrightView. Branch performance will be driven by investing in our employees while also aligning sales and operations to better service our customers. Profitable growth, led by new sales and improved customer retention, will be driven by prioritizing the customer and aligning incentives for our employees. We will continue to focus on high-quality business, strategic pricing efforts, and deliberate capital allocation, underscoring our prioritization of profitable growth. Taken together, the continuous execution of these initiatives will create higher returns and lead to shareholder value. Let's now turn to Slide 16 to review our outlook for fiscal '24. Profitable growth will continue to be our guiding factor and key focus. We are now providing full year guidance for fiscal '24 with expected total revenue of $2.825 billion to $2.975 billion, reflecting a range of relatively flat to 5% revenue growth. This assumes the following: In Maintenance, we expect our focus on profitable growth to continue to have a near-term impact, while we remain encouraged by the underlying health of the market and recent trends within our business. For snow, our fiscal '24 guidance range assumes flat at the low end and a return to five-year historical averages at the high end. And for Development, the conversion of our strong backlog of projects will continue to benefit revenue and margin growth. Moving to adjusted EBITDA, One BrightView will be the key driver to growing profit and expanding our margins. In fiscal '24, we expect margin expansion in both Maintenance and Development segments, benefiting from One BrightView key initiatives and disciplined management of the business. We expect these improvements to generate margin expansion of 40 to 80 basis points and adjusted EBITDA of $310 million to $340 million. In fiscal '24, we expect a continuation of healthy cash flow generation driven by profitable growth and improved operating performance. Our outlook on Slide 17 reflects our commitment to growth as we expect an increase in capital intensity to support our strategy. These higher levels are consistent with historical requirements to support the business and reflect a more normal snowfall this year. Contributions from reduced interest expense will be managed alongside the ongoing requirements to optimize the business. Altogether, we expect to generate free cash flow of $45 million to $75 million, supporting the financial flexibility we maintain today while enhancing our ability to generate future profitable growth.

Dale Asplund, CEO

With that, let me now turn the call back to Dale to wrap up on Slide 18. Thank you, Brett. Before we open the call for questions, I'd like to provide a few final thoughts. It's an exciting time at BrightView, and I'm honored to be leading such a talented team. There are tremendous opportunities ahead of us. We are moving this business forward with a clear strategy and vision for One BrightView. We are strategically positioned to accelerate profitable growth and create meaningful value for our shareholders. We will now open the call for questions.

Operator, Operator

We have our first question from Bob Labick from CJS Securities. Bob, your line is now open. Please go ahead.

Bob Labick, Analyst

Thank you, good morning.

Dale Asplund, CEO

Good morning.

Bob Labick, Analyst

And, Dale, congratulations on your new role.

Dale Asplund, CEO

Thank you very much, Bob.

Bob Labick, Analyst

I want to start by saying I'm absolutely very excited for you. I think you began the call this way, so I want to reiterate that your employee-first focus will drive customer satisfaction and improve retention. That all makes a lot of sense. Could you elaborate a bit more on what you've observed so far? I know it's only been 45 days, but I'd like to hear your thoughts on how to enhance branch operations and make adjustments. What are your operational intentions for organic growth from here?

Dale Asplund, CEO

Yeah, great question, Bob. First, I think you're right, 45 days, I've had a chance to visit many of our associates, some of our customers in different parts of the country. And what I've seen to start with is we have a very talented group of people that service our customers every day. We have a development group, tree care business, turf business, irrigation business, golf course maintenance business, and of course, our primary business, the Maintenance group. All these groups service customers at extremely high levels. Our biggest opportunity, like I said in my statement, is going to be to get everybody operating as One BrightView, getting all these people to leverage their skills together to service our customers. When we do that, Bob, we will accelerate our organic growth internally because we have talented people with the right focus on customers. We just haven't leveraged the ability for them to really act as one team when they go to market to the customer. So that upside is there within our own control of working as One BrightView, one group to drive profitable growth. So I would tell you, I am more optimistic than ever by talking to the people in the field because the closer I get to the customer, the more our team is engaged to service the customer. So that's a great way to start when you're going to focus on how can we grow the business. And that starts and ends with those people that touch our customer every day. We, as a leadership team, have to find a way to provide them all the tools they need to do it efficiently and make our customers feel the choice they made to choose BrightView is the obvious choice.

Bob Labick, Analyst

I appreciate that. It seems clear that with a focus on employees and customers, that's the direction being taken. How does this relate to investing in employees and enhancing margins? Is there a phase where you invest heavily in employees, leading to improved retention, followed by an increase in margins? How do these aspects connect if the priority remains on employees? The aim is to reduce turnover, increase retention, and consequently drive growth. The investment needs to come before the improved retention, correct? It can't happen at the same time. How do you view this in relation to margins over the next one, two, or three years?

Dale Asplund, CEO

Yeah. I would just say, in our business, we have obviously a lot of seasonality. But even the number of employees that were tasked with hiring to service our customers, training, and onboarding every year is a significant number. The more we put those employees as our primary focus to give them the tools, the safety equipment, the systems, and the vehicles to operate their jobs the right way, the more their job satisfaction will go up and the more we'll see that valuable resource of our employees and turnover come down. So that will, Bob, drive the margin expansion just by being able to reduce the cost we pay to recruit and onboard employees. So that is our first step. By doing that, that translates to them being able to serve the customer better and help us in that retention, as you said, to drive additional organic growth in the business. But our efforts to onboard and train customers right now are too high. That's why we have to prioritize our employees so we can make sure those employees are embracing a customer-centric focused business, and they know the importance they play in that journey.

Bob Labick, Analyst

Super. That sounds great. Good luck and thank you. I'll get back in queue.

Dale Asplund, CEO

Thanks, Bob.

Operator, Operator

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

Unidentified Analyst, Analyst

Hi. This is Luke on for Tim. Thanks for taking our questions today.

Dale Asplund, CEO

Hey, good morning. You're welcome.

Unidentified Analyst, Analyst

So it looks like land organic growth was down about 2.5% in the fourth quarter. I think you had previously expected it to be flat. Could you share what drove that decline? Was it primarily attributable to lower contract renewals or lower enhancement revenue or maybe something else?

Dale Asplund, CEO

Yeah. So I'll start off and then I'll kick it over to Brett. I'd just remind everybody, our focus was profitable growth and margin expansion. So the team has been focused to make sure the customers that we're going after are the customers that fit that profile. The businesses that we're focused on growing are businesses that are focused in that area, more of our core business, as you heard Brett mention on the call. So let me let Brett kind of break this down for you. But just remember, our focus is not just chasing revenue. It's going to be making sure the revenue we bring is accretive to our base business as we bring in new customers. So Brett, why don't you give them a little more detail on the financial side.

Brett Urban, CFO

Yeah. Hey, Luke, how are you doing this morning? I appreciate the question. Yes. As Dale mentioned, profitable growth is going to be our guiding factor moving forward. As you heard in previous calls, previous quarters, we were growing, but margin was not. As you look at this year and you normalize for snow, which we've talked about quite a bit, the margin profile has improved significantly, not only in the Development business and our Maintenance business but also in the corporate segment. If you think about organic growth for the quarter, look, I think that drive towards profitable growth and high-quality business will continue in the near term as we move forward. We're still getting favorable benefits on pricing. We're still being strategic in those efforts of about 50 basis points with our pricing efforts. We did last year with heightened fuel, have fuel surcharges that were in our top line of about 50 basis points as well. So those two things sort of offset from a jump-off point, Q4 over Q4. As Dale mentioned, there's a heightened focus on One BrightView, bringing all of our businesses together, whether it be golf or the aggregator business, etc. And I think if you look at our core underlying land business, we saw very stable demand and growth in that business, offset by maybe some contraction in our noncore businesses. As we move forward under Dale's leadership and really towards One BrightView, you'll see that alignment of the businesses, especially over the medium to long term.

Unidentified Analyst, Analyst

Great, thanks so much for that color there. And then maybe switching gears here. Just on your guidance for 2024, it looks like you're assuming maintenance land organic growth somewhere between down 2% and up 2%. Can you share what you're assuming in both those situations? And maybe if you could give us a sense, breakdown just between pricing and volume expectations as we head into next year?

Dale Asplund, CEO

Yeah. I think, obviously, that's a good question. I think if you look at what we've done for guidance is we gave a full annual guide on revenue. And really in that annual revenue guide of $2.825 billion to $2.975 billion, we've also given a range for where we believe our snow revenue will come out, which is $210 million to $270 million. Our Development business, which had an outstanding year last year, we think will continue to grow slightly. So we give a range because we don't want to really break down exactly each component. We think potentially, as we go through Q1 here, we'll see a similar trend to what we saw in Q4 as we focus our employees so that we can look to enhance our employees so they can make sure they drive retention with our customers. So I know that the change to give annual guidance is a little different. One way I think everybody should think about those numbers is our Q1 would normally be roughly about 22.5% of our total revenue. And then that snow business, you could consider roughly about 25% of it coming in Q1, 75% coming in Q2. And that probably would allow you to back into your assumptions, looking at last year's development by quarter of where we think revenue will grow over the next couple of months on maintenance. I hope that gives you enough on the pieces. But Brett, do you have anything you want to add?

Brett Urban, CFO

No, I'm just saying that when you look at the change in our guidance, in the past we would only provide Q1 guidance at this time, without giving Q2 or full year guidance. Now, we are offering a full year estimate. In that guidance, as shown in Slide 16 of the presentation, it indicates a range from minus 2% to positive 2%. As Dale mentioned, we're focusing on profitable growth, and because of that approach and our efforts as One BrightView, we expect to face some revenue impact in land during Q1 and the first half of 2024, similar to what we experienced in Q4. However, as One BrightView gains momentum, and as we take care of our employees who will subsequently take care of our customers, we expect to return to profitable growth in the medium to long term. It's also important to point out that in Q1 of last year, we experienced a hurricane impact that affected the business by about $7 million, but we don't anticipate any unusual events like that for this quarter.

Unidentified Analyst, Analyst

Great. Thanks so much.

Operator, Operator

Our next question comes from Phil Ng from Jefferies. Phil, your line is now open. Please go ahead.

Unidentified Analyst, Analyst

Hey, guys. This is Maggie on for Phil.

Dale Asplund, CEO

Good morning, Maggie. I wanted to start out on free cash flow. You had a really impressive step up this year. Can you talk about the nonrecurring benefit from this year and any of the other moving pieces that kind of get you to that fiscal '24 guidance? And then on the CapEx side, the guide implies a pretty big increase next year. Is that more of a catch-up for the business? Or is this a reasonable level to assume going forward? Yeah, Maggie, let me start. I'll take the back half of your question with the capital, and then I'll kick it over to Brett on the free cash flow. I think, as Brett had commented, the business did the right things in 2023, when we made strategic decisions to manage the capital down when we saw the snow business with the record level of reduced snow that we saw last year and the business reacted very well. Thus, demonstrating our ability to flex the business up or down and drive it by our CapEx and produce the free cash flow that we did. As far as the future guide on that free cash flow, I think a healthy range is probably closer to maybe $3.5 million is a little elevated, but I do think there's a plan for us to drive maybe a little shorter-term use of our vehicles and get a little more residual value as we go through the process, and we're going to have a little catch-up on that. Because don't forget, these vehicles that our employees operated in, they are our billboard that goes out and visits our customers. So the appearance of those that our employees work in every day is critical for our brand that we represent to our customers. But let me kick it over to Brett, and he can give you some on the nonrecurring.

Brett Urban, CFO

Yeah, Maggie, great question. Look, first off, I'll say we are extremely pleased with our cash flow performance this year. Coming off the year in FY '22, where we generated $7 million of free cash flow and then we went and made acquisitions after that and essentially took out debt to do so. That was not the game plan coming into '23. We were very clear with that early in our conversations on earnings calls and just really excited to report that we delivered great cash flow performance of $80 million in the year. We actually put money into the bank to keep on the sidelines for future strategic investments in the business. So extremely pleased about that. And as you think about last year to this year, the $70 million to the $80 million, yeah, we saw, as it wasn't snowing in Q2, we made a strategic decision to pull back on CapEx that benefited our cash flow year-over-year, roughly $50 million for the CapEx down year-over-year. But look, I think that was very strategic and shows the flexibility of our balance sheet, as Dale mentioned. In the year with low snow, we were able to flex capital down a bit. In years as we're guiding in '24, we're expecting a more, call it, historical snowfall, we would flex that CapEx guide up a little bit. And you think about '24 guidance, a range of cash flow of $45 million to $75 million. That's coming off the year where we did have about $25 million of onetime favorable impacts in our cash flow, whether it was related to tax benefits we got from our tax planning or partial sale of our interest rate hedge we had on our collar. But regardless of that, as you think about '24 guide, we're looking at guiding to a point of $60 million to even at the high end, $75 million, $80 million of free cash, which has put us back to where this year was. And that's through improved operating results and some of the savings on our interest expense, which, as you can see, we're redeploying capital back into the business. So dollars were saving on interest and dollars we're saving in other areas of the balance sheet, we'll redeploy back in the capital, as Dale mentioned, we'll refresh our fleet and be able to put our employees in a much more favorable working environment every day.

Unidentified Analyst, Analyst

Okay. Great. That's super helpful. And then, Dale, you kind of touched on this in your prepared remarks, but the guide for next year assumes minimal contribution from incremental M&A which has previously been a bigger focus for the company. I guess how do you think about the strategy around M&A over the near term? And should we expect to pause on deals in fiscal '24?

Dale Asplund, CEO

Great question, Maggie. I firmly believe in mergers and acquisitions. I support making investments to improve our ownership of assets. As the largest landscape provider in the nation, we should take advantage of opportunities. However, I think our approach to M&A at BrightView needs to be updated. We need to involve our operators earlier in the process and assess M&A not just for short-term financial gains but also consider cultural and strategic factors as important as the initial calculations. Furthermore, once we acquire a company, we need to integrate it into our business effectively. We will use our capital for M&A, so we must ensure that our foundation is prepared to grow those businesses profitably. By owning these businesses, we can leverage our scale to provide them with the necessary processes, systems, and support that they wouldn't require independently. I believe in M&A, and while we may not plan on making many moves in the next few quarters, we are already working to improve our process and get everyone aligned, starting with our field leaders. This will help us ensure that the deals we pursue are the right ones and that we can manage those assets effectively as part of BrightView. Although we haven't included much into our guidance, I want to emphasize my strong belief in M&A. We just need to take a moment to prepare ourselves, so when we do pursue M&A, it will create value for all our shareholders.

Unidentified Analyst, Analyst

All right. Thanks, guys, and good luck on the next quarter.

Dale Asplund, CEO

Thanks, Maggie.

Operator, Operator

Our next question comes from George Tong from Goldman Sachs. George, your line is now open.

George Tong, Analyst

Hi, thanks, good morning.

Dale Asplund, CEO

Good morning, George.

George Tong, Analyst

You talked about engaging in contract optimization in your Maintenance business in order to drive profitable growth. Can you elaborate on some of the initiatives there? In other words, are you pruning existing contracts? Are you turning down new business with unfavorable terms? And then when would you expect this initiative to be largely complete?

Dale Asplund, CEO

Yeah. So it's a good question, George. What I would say is, as Brett talked about, through our price realization, our focus on every account is to make sure as we feel some of those inflationary impacts, we find a way to work with our customers to ensure that the service we're providing reflects the value they see. Sometimes that creates price increases; sometimes, it's service reductions because they don't want to spend more money, and we partner with our customers to find a way to create a win-win situation. What I can tell you is we continue to evaluate all of our businesses to make sure they're working together effectively, and every part of our business is accretive to our customer value that we put out there. After 45 days, I think the team is doing the right thing. I also think there's a better way for us to go to market, to look at new accounts that could fill out our existing route. Our partners at One Rock have really helped us start to look at ways that we can enhance the profitability of existing routes just by adding strategic customers. I don't think that's a one-off point; I think it's going to be an evolution for us to continue to go through and focus on because that is the essence of this business: route optimization, enhancing, and making sure that our people can service the customers and find customers that can fill in those routes, thus reducing the costs to service the business we're providing. Short-term, we made some decisions. But long-term, George, it's a much bigger discussion about how we're going to manage the business long term. And as One BrightView, that's where we really see the benefit for our customers.

George Tong, Analyst

Got it. That's helpful. And then in Development, you had strong 7% organic revenue growth on a full year basis. This followed pretty strong growth of 10% organic in fiscal 2022. Can you unpack the strong growth in Development you've been seeing and the extent to which the Development business has structurally stepped up in growth potential to something north of 5% organically?

Dale Asplund, CEO

Yeah. It's a great question. First, we have a very strong backlog in our Development group. The economy has been on a roll, and some of that backlog is at the end of those jobs that have occurred over the last couple of years in the construction industry. That team has done a very good job securing a backlog of business, well north of what we would typically see at this time. But let me allow Brett to unpack it a little bit for you, if that would help.

Brett Urban, CFO

Yeah, George. Look, I would echo Dale's comments. The backlog is strong. We see no signs of any type of weakening in the economy. We see no signs of any type of recession looming. Our backlog and development are as high as it's ever been to the historical high levels. In 2022, we reported revenues of $700 million, '23 is close to $760 million, and we're guiding at the midpoint of 3.5% growth on 2023 results. So we see no slowing down in that business; quite the contrary. We're selling, as of this point, we're selling really into Q3 and Q4 of '24. As we get through this quarter and the next quarter, we'll be selling into '25 at that point. Just really robust growth in that business. We're very bullish on their ability to grow their backlog and put the projects in the ground. By the way, they just posted their fifth consecutive quarter of margin improvement in that business which we're extremely excited about, and we expect that margin improvement to continue as you can see in our guidance for '24.

George Tong, Analyst

Got it. And just to follow up on the second half of the question. To what extent do you think structurally the growth has stepped up to maybe something north of 5% at the midpoint, you're guiding to 3.5%. In other words, is there upside potential given the strength that you just talked about in the Development business?

Brett Urban, CFO

Yeah. George, I would say there's always potential for upside. This business is very dependent on cycles and somewhat dependent on weather as you get into the winter months. But as you think about the business in general, it's been pretty consistent growth year-over-year on a full year basis. I think as you look at our full year guide, when you think about last year, Q2, we saw a small revenue decline in Q2 of '23. But you can see for the full year basis, the business is growing north of 7% organically. We feel very bullish that, over a course of a full year, that business will grow. Could it grow more than 5%? That's a possibility. But I think as we stand here today, really look at more improvement in that business as well, which has been a focus and being more selective in projects that we sell. We still expect to grow the business revenue-wise, but margin has to come along with it, which we showed in '23, and we expect margin to come along in '24. And that may mean not growing at 10% to 15%, that may be growing at 5% with higher margins.

Dale Asplund, CEO

Yeah. And George, let me jump in. I think Development has been, I mean I would just add, George, I think the Development business for us has been a key area of growth. Where we need to get better as a team is finding a way to convert that Development business that we generate to new Maintenance business. That's where that One BrightView will come into play. We have one of the top 50 specialty companies in construction in North America, and they do some of the biggest development landscaping projects in the country. We need to find a way to make sure we have a successful handoff from that development to our Maintenance team as One BrightView. This is the lead-in to help that organic growth in Maintenance. I like that it keeps growing and our team in the field continues to enhance and beautify our communities. Now we just need to convert that over to future maintenance revenue so we can get the Maintenance group growing just as fast as the Development group.

Unidentified Analyst, Analyst

Very helpful. Thank you.

Operator, Operator

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

Andy Wittmann, Analyst

Great, thanks and good morning and thank you for taking my questions. I have several questions. But I think maybe the one I'll start with has to do with, I guess, Project Liberty and other business transformation costs. The question being, obviously, Project Liberty has been in flight for some time now, and many of the actions have already been taken and some of the cost benefits realized in 2023. I was just wondering how much cost benefit from actions already taken so far on Project Liberty are going to be benefiting your profit margins in 2024. In other words, what hasn't been recognized in the annual run rate of those cost reductions so far? Maybe Brett, if you could talk about related items to that, what do you expect for the business transformation cost here in 2024?

Dale Asplund, CEO

Yeah. So that's a great question, Andy. I would just say at a high level, Project Liberty was focused on some initial benefits from cost saves. If you go back, it started out as Project Accelerate. We've seen a lot of that. We still have an area to go when it comes to the procurement initiative that we'll work through in 2024. But as you've heard, we're going to transition from primarily those cost-saving initiatives to more of that One BrightView approach, where we can focus on customer retention and on new account conversion to ensure we're growing the business at the same time, so we can leverage size and scale. But Brett can probably give you the numbers. Obviously, the benefit we said that would come in 2024, $20 million is embedded in our guidance that you see coming out with the midpoint EBITDA at $325 million, but I'll let Brett talk to what he feels came in during '23 and where we're at towards our run rate for '24.

Brett Urban, CFO

Yeah, Andy, look, as you think about 2023, we said on our last call, we saw about $2 million or so realization from Project Accelerate, which was just a cost-cutting initiative essentially. Then as we morphed into Project Liberty in our Q3 call, we mentioned that we would see $20 million plus of savings related to the entire project. We saw roughly another $2 million to $3 million savings come through Q4 related to the original Accelerate and some early signs of Liberty. But I think as you think about our guidance for '24 and Liberty now morphs into One BrightView. One BrightView is just going to be the way we operate the business. We're going to take care of our customers, who in turn take care of our employees, who are in turn accountable to our customers. If you think about our guide for 2024, we're guiding at a midpoint of 60 basis points of margin expansion. We're guiding at a midpoint of $26 million of EBITDA growth that's inclusive of One BrightView or, as previously talked about, Project Liberty. To be able to get to that transformational cost, able to get to that to get the Project Liberty aka One BrightView and move that needle forward, we don't expect any significant increase in transformational costs above what we had this year, right? This year, we went through a CEO change. We had some business transformation cost that was related to that and some transition to the new CEO. We don't expect the transformation of getting from Liberty to One BrightView in the way we operate the business to have any type of significant impact on our cash flow that hasn't been already included in our guidance.

Andy Wittmann, Analyst

Okay. That's really clear on the transformation cost. So I heard a couple of million dollars in 3Q saved, maybe $3 million in 4Q saved. So the implication mean that if you're going for $20 million you've got about $15 million benefiting the '24 EBITDA. Is that the quick summary?

Dale Asplund, CEO

Yeah, that's a quick summary. But just as we think about moving forward, and we get on our net to talk about One BrightView, this is the way we're going to operate the business. So we are morphing a project that had a sticker tag on it of $20 million to how we operate the business. The way we operate our business will be included in our future guides. And we did our best to include that in our full year guide this go-around the $310 million to $340 million. So yes, I would say that includes somewhere around $15 million of, call it, legacy Project Accelerate and Project Liberty. But the remainder of the improvement in that guide is going to just be the way we run the business.

Andy Wittmann, Analyst

Yeah. Okay. That's helpful. And I guess stepping way back, I guess, just philosophically, Dale, being the new leader of this company, it's always such an opportune time when things can need a change to kind of step back and take stock of the situation. As it comes to the guidance philosophy, I guess, it seems like this would be a time where you guys put out a guidance that has very little expectations or a low bar, knowing that you've got the opportunity to kind of clear the ducts and reset things. Is that the way we should think about this guidance from here? Or is there a different approach in terms of how you formulated the approach in putting this guidance together?

Dale Asplund, CEO

No. I definitely think our guidance is a guidance that we feel comfortable with, with an EBITDA range that's well above the $299 million we delivered this year. So I don't see by any means that being a conservative range. Going from $310 million to $345 million is very realistic, and $340 million is very realistic. I think somewhere around that $325 million is a good starting point for us. Now to be fair, we don't know how much it's going to snow and we don't know when it's going to snow, and we gave you a guide on that range. If it snows at the high end of that expected $210 million to $270 million, we can come in at the end of that range. If it doesn't snow, like it didn't snow last year, there's a chance we'll come in towards the low end. But I wouldn't look at the guide as a complete, we're trying to be conservative as we come out. We feel that where our plan is this year with what we felt in Q4, we're realistic to get into this range where we came out at the start of the year. Shifting from given quarterly guidance to giving an annual guidance, that's a big shift. I think we are going to start helping people see what we plan on doing for the full year versus just running the business tactically quarter-by-quarter.

Andy Wittmann, Analyst

Okay. That’s helpful context. Thank you very much.

Dale Asplund, CEO

Thanks, Andy.

Operator, Operator

We currently have no further questions. So I'd like to hand the call back to Dale Asplund for closing remarks. Please go ahead.

Dale Asplund, CEO

Thank you, operator. And thank you to everyone for your interest in BrightView. As you can tell by our tone, we are very excited about the opportunity ahead for BrightView, and I'm thrilled to be leading this great company through this improvement period. Our objectives are clear. We are committed to becoming One BrightView, growing profitably and creating meaningful shareholder value. I look forward to getting to know many of you in the weeks and months to come. There's a lot of work ahead of us, but the future is bright for One BrightView. Thank you. Operator, you can now end the call.

Operator, Operator

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines. Thank you.