BrightView Holdings, Inc.
- Company Name
- BrightView Holdings, Inc.
- Stock Symbol
- Class Period
- Purchasers of BrightView common stock pursuant to the Company’s IPO on or around July 2, 2018
- Motion Deadline
- June 14, 2019
- Eastern District of Pennsylvania
The complaint charges BrightView and certain of its officers with violations of the Securities Act of 1933. BrightView provides commercial landscaping services in the United States. On or around July 2, 2018, BrightView completed its initial public offering (“IPO”), selling 24.5 million shares of common stock at $22.00 per share, generating net proceeds of approximately $501.2 million.
The complaint alleges that the Registration Statement issued in connection with the Company’s IPO contained false and misleading statements and/or failed to disclose adverse information know to defendants at the time of the IPO, including that a material portion of BrightView’s contracts were underperforming and/or represented undesirable costs to the Company, and as a result, BrightView would implement a “Managed Exit” strategy to end its low margin and non-profitable contracts with customers, which would negatively impact BrightView’s future revenue throughout 2018 and well into fiscal year 2019.
On August 8, 2018, BrightView announced its financial results for the 2018 third quarter, ended June 30, 2018. Despite reporting “strong third quarter results” and “record revenues,” the Company reported that “[r]evenues from the Development Services segment declined 5.7% . . . due to winding down production on certain large projects that reached substantial completion during the quarter, coupled with the timing of commencing work on new projects.” The following day, on August 9, 2018, BrightView filed its quarterly report with the SEC in which the Company disclosed that its Maintenance Services revenue was being negatively impacted by its “Managed Exit” strategy, which would allow certain “underperforming contracts” to expire upon maturity or be renegotiated to provide the Company with more favorable terms. On this news, the price of BrightView common stock fell $2.30 per share, or over 10%.
On November 27, 2018, BrightView announced its financial results for the 2018 fourth quarter and fiscal year, revealing that for the quarter and fiscal year its Managed Exit strategy had offset its Maintenance Services revenue by 2.6% and 1.6%, respectively, and that the strategy would result in a decline in revenue of $15 to $25 million over the course of fiscal 2019. The following day, BrightView filed its annual report with the SEC, in which the Company elaborated on the extent of its underperforming contracts, disclosing that Net Service revenues for the twelve months ended September 30, 2018 of $2.3 billion were negatively impacted “by a $23.1 million decrease as a result of the Company’s managed exit strategy surrounding underperforming contracts.”
Then, on February 7, 2019, BrightView announced its financial results for the first quarter of 2019, ended December 31, 2018. The Company’s CEO blamed the Company’s disappointing results on the “strategic Managed Exit initiative and other operating conditions.” Additionally, in BrightView’s quarterly report filed with the SEC the same day, the Company advised investors that the underperforming contracts that were part of the Managed Exit strategy accounted for a decline in landscape services revenues of $10.8 million for the quarter and $23.1 million for the full year, and that the Company expected a loss in revenue of over $25 million for 2019. On this news, the price of BrightView stock declined over 10% to close at $13.23 per share on February 7, 2019, and continued to fall another 3.6% on February 8, 2019 to close at $12.75 per share, representing a total decline of 42% from the IPO price.