-$0.85
$7.25
bear -$0.85
base $1.80
bull $7.25
margin of safety $0.75
market price* $10.54
BrightView is the largest US commercial landscaping company: recurring grounds maintenance (mowing, irrigation, tree care, snow removal) for office parks, HOAs, hospitals, campuses and retail centers, plus one-time landscape development work. Revenue has held between about $2.3 billion and $2.8 billion for seven years ($2.40B in fiscal 2019, $2.67B in fiscal 2025), so the earning power is durable but has not grown in real terms. How we measured earnings. We start from operating cash flow, strip out swings in working capital (for example, a $74M payables build in fiscal 2020 that partly reversed in fiscal 2022), and deduct stock compensation as a real cost. BrightView runs a fleet of about 15,000 trucks and trailers, much of it financed through leases, so we also deduct the principal repaid on finance leases along with purchases of equipment (net of equipment sales). Ignoring the leases would overstate what the business really earns. On that basis, earnings per share were $0.65, $0.72, $1.20, $0.48, $0.33, $0.81 and -$0.15 for fiscal 2019 through 2025. We used the median of all seven years ($0.48, about $46 million a year) because the business has not been transformed over that period and the range includes both strong and weak years. In fiscal 2025 equipment purchases jumped to $254 million from $78 million; the filing does not explain why, and we could not reconcile it, so it is included rather than excluded. A senior claim ahead of common shareholders. In August 2023 BrightView sold $500 million of 7% convertible preferred stock to One Rock, costing about $35.8 million a year. Because it ranks ahead of common shareholders, we deduct that dividend from the earnings available to common owners. That leaves only about $10 million a year (about $0.11 per share) in our middle case, which is why the values below are small relative to the size of the company. The company also carries substantial floating-rate term debt; interest is already inside the cash flow figures. Growth. Last year's earnings fell (from $0.81 to -$0.15 per share), and we assume no growth in any case, so year one starts at or below the trailing figure. Growth from tuck-in acquisitions, price increases, or the recent equipment spending is not credited: revenue has been flat to slightly up despite years of acquisitions, so there is no proven growth to count. Earnings are treated as continuing at the assumed level indefinitely because recurring maintenance contracts with entrenched customers are a structural feature the record supports, but not as growing. Base case, $1.80 per share: earnings settle at the seven-year median of roughly $46 million a year, less the $35.8 million preferred dividend, held flat and discounted at 6%. Bear case, -$0.85 per share: earnings stay at the fiscal 2023 level of about $31 million, which is the weakest year before the fiscal 2025 equipment surge and reflects heavy interest costs and rising equipment needs. That falls short of the preferred dividend by about $5 million a year, so on this outcome the common shares appear to owe more than they are worth, by roughly $80 million in total. In practice the preferred dividend can be paid in kind rather than cash, which would compound the claim ahead of common shareholders. Bull case, $7.25 per share: earnings return to about $78 million a year (the fiscal 2024 level; fiscal 2019, 2020, 2021 and 2024 were all between $67M and $127M), which is a level the company has reached in four of the last seven years. After the preferred dividend, roughly $42 million a year is left for common holders. What would make this wrong. If the fiscal 2025 equipment spending turns out to be a one-off catch-up and normal spend returns to about $100 million a year, earnings would sit nearer the bull case. If instead it is the new normal, earnings are negative and even the bear case is too generous. The wide range between the cases reflects how thin the common shareholders' slice is after the preferred dividend and interest costs. The margin-of-safety price sits well below the base case because the downside can reach below zero.