BrightView Holdings, Inc.

Previous wording

We are the largest provider of commercial landscaping services in the United States, with revenues approximately 5 times those of our next largest commercial landscaping competitor. We provide commercial landscaping services ranging from landscape maintenance and enhancements to tree care and landscape development. We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 290 branches with a qualified service partner network. Our branch delivery model underpins our position as a single-source end-to-end landscaping solution provider to our diverse customer base at the national, regional and local levels, which we believe represents a significant competitive advantage. We believe our commercial customer base understands the financial and reputational risk associated with inadequate landscape maintenance and considers our services to be essential and non-discretionary.

Current wording

We are the largest provider of commercial landscaping services in the United States, with revenues approximately 5 times those of our next largest commercial landscaping competitor. We provide commercial landscaping services ranging from landscape maintenance and enhancements to tree care and landscape development. We operate through a differentiated and integrated national service model which systematically delivers services at the local level by combining our network of over 280 branches with a qualified service partner network. Our branch delivery model underpins our position as a single-source end-to-end landscaping solution provider to our diverse customer base at the national, regional and local levels, which we believe represents a significant competitive advantage. We believe our commercial customer base understands the financial and reputational risk associated with inadequate landscape maintenance and considers our services to be essential and non-discretionary.

Previous wording

We report our results of operations through two reportable segments: Maintenance Services and Development Services. We serve a geographically diverse set of customers through our strategically located network of branches in 35 U.S. states, and, through our qualified service partner network, we are able to efficiently provide nationwide coverage in all 50 U.S. states.

Current wording

We report our results of operations through two reportable segments: Maintenance Services and Development Services. We serve a geographically diverse set of customers through our strategically located network of branches in 36 U.S. states.

Previous wording

For Development Services, revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress. The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated. These losses have been immaterial in prior periods. Changes in job performance, job conditions and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Current wording

For Development Services, revenue is primarily recognized over time using the cost-to-cost input method, measured by the percentage of cost incurred to date to the estimated total cost for each contract, which we believe to be the best measure of progress. The full amount of anticipated losses on contracts is recorded as soon as such losses can be estimated. These losses have been immaterial to current and historical operations. Changes in job performance, job conditions and estimated profitability, including final contract settlements, may result in revisions to costs and revenue and are recognized in the period in which the revisions are determined.

Previous wording

Other expense (income) consists primarily of investment gains related to investments held in Rabbi Trust.

Current wording

Other (income) consists primarily of investment gains related to investments held in Rabbi Trust.

Previous wording

Income tax expense (benefit) includes U.S. federal, state and local income taxes. Our effective tax rate differs from the statutory U.S. income tax rate due to the effect of state and local income taxes, tax credits and certain nondeductible expenses. Our effective tax rate may vary from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, the geographical distribution of our pre-tax earnings, changes in the tax rates of different jurisdictions, the availability of tax credits and nondeductible items. Changes in judgment due to the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the period of the change.

Current wording

Income tax (benefit) includes U.S. federal, state and local income taxes. Our effective tax rate differs from the statutory U.S. income tax rate due to the effect of state and local income taxes, tax credits and certain nondeductible expenses. Our effective tax rate may vary from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, the geographical distribution of our pre-tax earnings, changes in the tax rates of different jurisdictions, the availability of tax credits and nondeductible items. Changes in judgment due to the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the period of the change.

Previous wording

In addition to our organic growth, we have grown, and expect to continue to grow, our business through acquisitions in an effort to better service our existing customers and to attract new customers. These acquisitions have allowed us to execute our “strong-on-strong” acquisition strategy in which we focus on increasing our density and leadership positions in existing local markets, entering into attractive new geographic markets and expanding our portfolio of landscape enhancement services and improving technical capabilities in specialized services. As we continue to selectively pursue acquisitions that complement our “strong-on-strong” acquisition strategy, we believe we are the acquirer of choice in the highly fragmented commercial landscaping industry because we offer the ability to leverage our significant size and scale, as well as provide stable and potentially expanding career opportunities for employees of acquired businesses. In accordance with GAAP, the results of the acquisitions we have completed are reflected in our consolidated financial statements from the date of acquisition. We incur transaction costs in connection with identifying and completing acquisitions and ongoing integration costs as we integrate acquired companies and seek to achieve synergies. During the nine months ended June 30, 2024, the Company incurred $(0.5) million of integration costs related to acquisitions completed prior to fiscal 2024. While integration costs vary based on factors specific to each acquisition, such costs are primarily comprised of one-time employee retention costs, employee onboarding and training costs, fleet and uniform rebranding costs and adjustments to performance-based contingent consideration. We typically anticipate integration costs to represent approximately 7%-9% of the acquisition price, and to be incurred within 12 months of acquisition completion.

Current wording

In addition to our organic growth, we have grown, and expect to continue to grow, our business through acquisitions in an effort to better service our existing customers and attract new customers. These acquisitions focused on increasing our density and leadership positions in existing local markets, entering into attractive new geographic markets and expanding our portfolio of landscape enhancement services and improving technical capabilities in specialized services.

Previous wording

Goodwill represents the excess of the purchase price over the fair values of the underlying net assets acquired in an acquisition. Goodwill is not amortized, but rather is tested annually for impairment in the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Current wording

Goodwill represents the excess of the purchase price over the fair values of the underlying net assets acquired in an acquisition. Goodwill is not amortized, but rather is tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We test goodwill for impairment annually in the fourth quarter of each year using data as of July 1 of that year.

Previous wording

Goodwill is allocated to, and evaluated for impairment at our three identified reporting units. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. We may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit’s net assets to the fair value of the reporting unit. The Company determined fair values of each of the reporting units using a combination of the income and market multiple approaches. The estimates used in each approach include significant management assumptions, including long-term future growth rates, operating margins, discount rates and future economic and market conditions.

Current wording

Goodwill is allocated to, and evaluated for impairment at our two identified reporting units. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. We may elect not to perform the qualitative assessment for some or all reporting units and perform the quantitative impairment test. The quantitative goodwill impairment test requires us to compare the carrying value of the reporting unit’s net assets to the fair value of the reporting unit. The Company determined fair values of each of the reporting units using a combination of the income and market multiple approaches. The estimates used in each approach include significant management assumptions, including valuation multiples of selected guideline public companies, long-term future growth rates, operating margins, and discount rates.

Previous wording

Based on our most recent annual analysis as of July 1, 2023, the fair values for all identified reporting units exceeded the carrying values, and therefore no indicators of impairment existed for the reporting units; however, the fair value of the Maintenance reporting unit exceeded the carrying value by 4.7%. Since the Maintenance reporting unit fair value did not substantially exceed the carrying value, we may be at risk for an impairment loss in the future if interest rates and market conditions continue to trend unfavorably or if our forecasts assumed in the fair value calculation are not realized. As of June 30, 2024, there was $1,797.7 million of goodwill recorded related to the Maintenance reporting unit.

Current wording

Based on our most recent annual analysis as of July 1, 2024, the fair values for all identified reporting units exceeded the carrying values, and therefore no indicators of impairment existed for the reporting units; however, the fair value of the Maintenance reporting unit exceeded the carrying value by 9.6%. Since the Maintenance reporting unit fair value did not substantially exceed the carrying value, we may be at risk for an impairment loss in the future if interest rates and market conditions continue to trend unfavorably or if our forecasts assumed in the fair value calculation are not realized. As of December 31, 2024, there was $1,797.5 million of goodwill recorded related to the Maintenance reporting unit.

Previous wording

We believe the non-discretionary nature of our landscape maintenance services provides us with a fairly predictable recurring revenue model. The perennial nature of the landscape maintenance service sector, as well as its wide range of end users, minimizes the impact of a broad or sector-specific downturn. However, in connection with our enhancement services and development services, when demand for commercial construction declines, demand for landscape enhancement services and development projects may decline. When commercial construction activity rises, demand for landscape enhancement services to maintain green space may also increase.

Current wording

We believe the non-discretionary nature of our landscape maintenance services provides us with a fairly predictable recurring revenue model. The perennial nature of the landscape maintenance service sector, as well as its wide range of end users, minimizes the impact of a broad or sector-specific downturn. However, in connection with our enhancement services and development services, when demand for commercial construction declines, demand for landscape enhancement services and development projects may decline. When commercial construction activity rises, demand for landscape enhancement services to maintain green space may also increase. This is especially true for new developments in which green space tends to play an increasingly important role. Economic conditions, including rising inflation and fuel prices, as well as rising interest rates, have impacted and may further impact our costs and expenses, and fluctuations in labor markets, may impact our ability to identify, hire and retain employees.

Previous wording

Net service revenues for the three months ended June 30, 2024 decreased $27.2 million, or 3.6%, to $738.8 million, from $766.0 million in the 2023 period. The decrease was driven by a decrease in Maintenance Services revenues of $39.9 million, partially offset by an increase in Development Services revenues of $11.6 million as discussed further below in Segment Results.

Current wording

Net service revenues for the three months ended December 31, 2024 decreased $27.5 million, or 4.4%, to $599.2 million, from $626.7 million in the 2023 period. The decrease was driven by a decrease in Maintenance Services revenues of $33.0 million, partially offset by an increase in Development Services revenues of $6.4 million as discussed further below in Segment Results.

Previous wording

Gross profit for the three months ended June 30, 2024 decreased $21.0 million, or 10.6%, to $177.6 million, from $198.6 million in the 2023 period. Gross margin decreased 190 basis points, to 24.0%, in the three months ended June 30, 2024, from 25.9% in the comparable 2023 period. The decreases in gross profit and gross margin were primarily driven by the decrease in Net Services revenues coupled with increased labor costs. Partially offsetting this was lower subcontractor costs resulting from our strategic reduction in non-core businesses.

Current wording

Gross profit for the three months ended December 31, 2024 decreased $7.0 million, or 5.2%, to $126.8 million, from $133.8 million in the 2023 period. Gross margin decreased 10 basis points, to 21.2%, in the three months ended December 31, 2024, from 21.3% in the comparable 2023 period. The decreases in gross profit was primarily driven by the decrease in Net Services revenues described above.

Previous wording

Selling, general and administrative expense for the three months ended June 30, 2024 decreased $16.5 million, or 12.1%, to $120.1 million, from $136.6 million in the 2023 period. As a percentage of revenue, Selling, general and administrative expense decreased 150 basis points for the three months ended June 30, 2024 to 16.3%, from 17.8% in the 2023 period. The decrease was driven by lower labor related costs as a result of the company's cost management initiatives.

Current wording

Selling, general and administrative expense for the three months ended December 31, 2024 decreased $10.6 million, or 8.2%, to $119.3 million, from $129.9 million in the 2023 period. As a percentage of revenue, Selling, general and administrative expense decreased 80 basis points for the three months ended December 31, 2024 to 19.9%, from 20.7% in the 2023 period. The decrease was driven primarily by decreases in compensation-related costs as a result of the Company's cost management initiatives.

Previous wording

Amortization expense for the three months ended June 30, 2024 decreased $2.2 million, or 20.4%, to $8.6 million, from $10.8 million in the 2023 period. The decrease was principally due to a $1.0 million decrease in the amortization of historical intangible assets recognized in connection with the KKR Acquisition and the ValleyCrest Acquisition, based on the pattern consistent with expected future cash flows calculated at that time, combined with a $1.2 million decrease in amortization expense for intangible assets recognized in connection with our acquired businesses subsequent to the ValleyCrest Acquisition.

Current wording

Amortization expense for the three months ended December 31, 2024 decreased $2.0 million, or 19.8%, to $8.1 million, from $10.1 million in the 2023 period. The decrease was principally due the decrease in the amortization of intangible assets, based on the pattern consistent with expected future cash flows calculated at the time the assets were acquired.

Previous wording

Other expense was $0.5 million for the three months ended June 30, 2024 compared to income of $0.6 million in the 2023 period. The increase of $1.1 million was driven principally by the loss on debt extinguishment combined with the change in value of investments held in the Rabbi Trust.

Current wording

Other income was $0.2 million for the three months ended December 31, 2024 compared to $1.2 million in the 2023 period. The decrease of $1.0 million was driven principally by the change in value of investments held in the Rabbi Trust.

Previous wording

Interest expense, net for the three months ended June 30, 2024 decreased $12.3 million, or 44.9%, to $15.1 million, from $27.4 million in the 2023 period. The decrease was driven by lower interest expense as a result of the decrease in the long-term debt balance combined with an increase in interest income associated with the increase in cash and cash equivalents balance.

Current wording

Interest expense, net for the three months ended December 31, 2024 decreased $2.9 million, or 17.0%, to $14.2 million, from $17.1 million in the 2023 period. The decrease was driven by lower interest expense as a result of the decrease in interest rates as a result of the repricing of our Series B Term Loans in fiscal 2024 and the decrease in the Company's long-term debt balance with an increase in interest income associated with the increase in cash and cash equivalents balance.

Previous wording

For the three months ended June 30, 2024, Income tax expense was $9.9 million compared to $7.6 million in the 2023 period. The increase was primarily attributable to the distribution of pre-tax earnings across legal entities.

Current wording

For the three months ended December 31, 2024, Income tax benefit was $4.2 million compared to $5.7 million in the 2023 period. The decrease was primarily attributable to the decrease in net loss relative to the prior year.

Previous wording

For the nine months ended June 30, 2024, Net income was $40.8 million compared to net loss of $24.1 million in the 2023 period due to the changes noted above. Net income as a percentage of revenue was 2.0% for the nine months ended June 30, 2024 compared to net loss as a percentage of revenue of 1.2% in the 2023 period.

Current wording

For the three months ended December 31, 2024, Net loss was $10.4 million compared to $16.4 million in the 2023 period due to the changes noted above. Net loss as a percentage of revenue was 1.7% for the three months ended December 31, 2024, compared to 2.6% for the three months ended December 31, 2023.

Previous wording

Adjusted EBITDA increased $6.1 million for the three months ended June 30, 2024, to $107.9 million, from $101.8 million in the 2023 period. Adjusted EBITDA as a percentage of revenue was 14.6% and 13.3% for the three months ended June 30, 2024 and 2023, respectively. The increase in Adjusted EBITDA was primarily driven by an increase of $7.0 million, or 29.0%, in Development Services Segment Adjusted EBITDA, combined with an decrease of $4.7 million, or 5.0%, in Maintenance Services Segment Adjusted EBITDA, as discussed further below in Segment Results.

Current wording

Adjusted EBITDA increased $5.4 million for the three months ended December 31, 2024, to $52.1 million, from $46.7 million in the 2023 period. Adjusted EBITDA as a percentage of revenue was 8.7% and 7.5% for the three months ended December 31, 2024 and 2023, respectively. The increase in Adjusted EBITDA was primarily driven by an increase of $3.2 million, or 10.2%, in Maintenance Services Segment Adjusted EBITDA, combined with an increase of $2.2 million, or 14.4%, in Development Services Segment Adjusted EBITDA, as discussed further below in Segment Results.

Previous wording

Adjusted Net Income for the three months ended June 30, 2024 increased $6.9 million to $48.3 million, from $41.4 million in the 2023 period due to the changes noted above.

Current wording

Adjusted Net Income for the three months ended December 31, 2024 increased $2.6 million to $5.6 million, from $3.0 million in the 2023 period due to the changes noted above.

Previous wording

In addition to our GAAP financial measures, we review various non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“Adjusted EPS”) and Free Cash Flow.

Current wording

In addition to our GAAP financial measures, we review various non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“Adjusted EPS”) and Adjusted Free Cash Flow.

Previous wording

We believe that Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net income (loss) including interest and depreciation and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items. Adjusted EPS is defined as Adjusted Net Income divided by the Adjusted Weighted Average Number of Common Shares Outstanding. We define Adjusted Weighted Average Number of Common Shares Outstanding as the weighted average number of common shares outstanding used in the calculation of basic earnings per share plus shares of common stock related to the Series A Preferred Stock on an as-converted basis, assumed to be converted for the entire period. We believe that the adjustments applied in presenting Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future.

Current wording

We believe that Adjusted EBITDA, Adjusted Net Income and Adjusted EPS are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA represents net (loss) before interest, taxes, depreciation, amortization and certain non-cash, non-recurring and other adjustment items. Adjusted Net Income is defined as net (loss) including interest and depreciation and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions and the removal of the discrete tax items. Adjusted EPS is defined as Adjusted Net Income divided by the (i) weighted average number of common shares outstanding used in the calculation of basic earnings per share plus (ii) shares of common stock related to the Series A Preferred Stock on an as-converted basis, assumed to be converted for the entire period. We believe that the adjustments applied in presenting Adjusted EBITDA, Adjusted Net (Loss) and Adjusted EPS are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future.

Previous wording

We believe Free Cash Flow is a helpful supplemental measure to assist us and investors in evaluating our liquidity. Free Cash Flow represents cash flows from operating activities less capital expenditures, net of proceeds from the sale of property and equipment. We believe Free Cash Flow is useful to provide additional information to assess our ability to pursue business opportunities and investments and to service our debt. Free Cash Flow has limitations as an analytical tool, including that it does not account for our future contractual commitments and excludes investments made to acquire assets under finance leases and required debt service payments.

Current wording

We believe Adjusted Free Cash Flow is a helpful supplemental measure to assist us and investors in evaluating our liquidity. Adjusted Free Cash Flow represents cash flows from operating activities less capital expenditures, net of proceeds from the sale of property and equipment. We believe Adjusted Free Cash Flow is useful to provide additional information to assess our ability to pursue business opportunities and investments and to service our debt. Adjusted Free Cash Flow has limitations as an analytical tool, including that it does not account for our future contractual commitments and excludes investments made to acquire assets under finance leases and required debt service payments.

Previous wording

Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net income (loss) as a measure of financial performance or cash flows provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to the same or other similarly titled measures of other companies and can differ significantly from company to company.

Current wording

Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Adjusted Free Cash Flow are not recognized terms under GAAP and should not be considered as an alternative to net (loss) as a measure of financial performance or cash flows provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to the same or other similarly titled measures of other companies and can differ significantly from company to company.

Previous wording

Set forth below are the reconciliations of net income (loss) to Adjusted EBITDA and Adjusted Net Income, and cash flows from operating activities to Free Cash Flow. Adjusted EPS is defined as Adjusted Net Income (shown below) divided by the Adjusted Weighted Average Number of Common Shares Outstanding for the period used in the calculation of basic EPS which is presented in Note 14 “Earnings (Loss) Per Share of Common Stock” in the Notes to our unaudited consolidated financial statements.

Current wording

Set forth below are the reconciliations of net (loss) to Adjusted EBITDA and Adjusted Net Income, and cash flows from operating activities to Adjusted Free Cash Flow. Adjusted EPS is defined as Adjusted Net Income (shown below) divided by the Adjusted Weighted Average Number of Common Shares Outstanding for the period used in the calculation of basic EPS which is presented in Note 14 “(Loss) Per Share of Common Stock” in the Notes to our unaudited consolidated financial statements.

Previous wording

Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a reduction of income tax expense (benefit). The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include tax impact of the gain on divestiture of U.S. Lawns, changes in laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances.

Current wording

Represents the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of the applicable discrete tax items, which collectively result in a reduction of income tax (benefit). The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include tax impact of the gain on divestiture of U.S. Lawns, changes in laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances.

Previous wording

Represents expenses related to distinct initiatives, typically significant enterprise-wide changes. Such expenses are excluded from the measures disclosed above since such expenses vary in amount based on occurrence as well as factors specific to each of the activities, are outside of the normal operations of the business, and create a lack of comparability between periods.

Current wording

Represents expenses related to distinct initiatives, typically significant enterprise-wide changes, including actions taken as part of the Company's One BrightView initiative. Such expenses are excluded from the measures disclosed above since such expenses vary in amount based on occurrence as well as factors specific to each of the activities, are outside of the normal operations of the business, and create a lack of comparability between periods.

Previous wording

We classify our business into two segments: Maintenance Services and Development Services. Our corporate operations are not allocated to the segments and are not discussed separately as any results that had a significant impact on operating results are included in the consolidated results discussion above.

Current wording

We classify our business into two segments: Maintenance Services and Development Services. Our corporate operations are allocated to the segments on a pro rata basis, based on segment revenue.

Previous wording

The following tables present Net service revenues, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each of our segments for the three months ended June 30, 2024 and 2023. Changes in Segment Adjusted EBITDA Margin are shown in basis points, or bps.

Current wording

The following tables present Net service revenues, Segment Adjusted EBITDA, and Segment Adjusted EBITDA Margin for each of our segments for the three months ended three months ended December 31, 2024 and 2023. Changes in Segment Adjusted EBITDA Margin are shown in basis points, or bps.

Previous wording

Maintenance Services net service revenues for the three months ended June 30, 2024 decreased by $39.9 million, or 7.1%, from the 2023 period. The decrease was principally driven by a reduction in underlying commercial landscape services, underpinned by strategic reductions of non-core businesses and reduced ancillary services.

Current wording

Maintenance Services net service revenues for the three months ended December 31, 2024 decreased by $33.0 million, or 7.5%, from the 2023 period. The decrease was principally driven by a reduction in underlying commercial landscape services and snow revenue, underpinned by strategic reductions of non-core businesses.

Previous wording

Segment Adjusted EBITDA for the three months ended June 30, 2024 decreased by $4.7 million to $89.3 million from $94.0 million in the 2023 period. Segment Adjusted EBITDA Margin increased 40 basis points, to 17.0%, in the three months ended June 30, 2024, from 16.6% in the 2023 period. The decrease in Segment Adjusted EBITDA was principally driven by the decrease in revenues described above. The increase in Segment Adjusted EBITDA Margin was driven by lower overhead as a result of the Company's cost management initiatives partially offset by the decrease in revenues described above and increased landscape services labor costs.

Current wording

Segment Adjusted EBITDA for the three months ended December 31, 2024 increased by $3.2 million to $34.6 million from $31.4 million in the 2023 period. Segment Adjusted EBITDA Margin increased 140 basis points, to 8.5%, in the three months ended December 31, 2024, from 7.1% in the 2023 period. The increase in Segment Adjusted EBITDA and Segment Adjusted EBITDA Margin was primarily driven by lower overhead as a result of the Company's cost management initiatives, partially offset by the decrease in revenues described above and increased landscape services labor costs.

Previous wording

Development Services net service revenues for the three months ended June 30, 2024 increased $11.6 million, or 5.7%, compared to the 2023 period. The increase was driven by an increase in Development Services project volumes.

Current wording

Development Services net service revenues for the three months ended December 31, 2024 increased $6.4 million, or 3.5%, compared to the 2023 period. The increase was driven by an increase in Development Services project volumes.

Previous wording

Our principal sources of liquidity are existing cash and cash equivalents, cash generated from operations and borrowings under the Credit Agreement and the Receivables Financing Agreement. Our principal uses of cash are to provide working capital, meet debt service requirements, fund capital expenditures and finance strategic plans, including acquisitions and share repurchases under the share repurchase program announced in December 2021. We may also seek to finance capital expenditures under finance leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. While we have in the past financed certain acquisitions with internally generated cash, in the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings.

Current wording

Our principal sources of liquidity are existing cash and cash equivalents, cash generated from operations and borrowings under the Credit Agreement and the Receivables Financing Agreement. Our principal uses of cash are to provide working capital, meet debt service requirements, fund capital expenditures and finance strategic plans, including acquisitions. We may also seek to finance capital expenditures under finance leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. While we have in the past financed certain acquisitions with internally generated cash, in the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings.

Previous wording

Net cash provided by operating activities for the nine months ended June 30, 2024 increased $62.8 million, to $152.1 million, from $89.3 million in the 2023 period. This increase was due to increases in cash provided by accounts receivable and unbilled and deferred revenue and an increase in net income. This was partially offset by a decrease in cash provided by other operating assets and an increase in cash used by accounts payable and other operating liabilities.

Current wording

Net cash provided by operating activities for the three months ended December 31, 2024 increased $34.3 million, to $60.5 million, from $26.2 million in the 2023 period. This increase was due to increases in cash provided by accounts payable, unbilled and deferred revenue, and other operating liabilities and a decrease in net loss.

Previous wording

Cash Flows provided (used) by Investing Activities

Current wording

Cash Flows (used) by Investing Activities

Previous wording

Net cash provided by investing activities increased $85.9 million to an inflow $22.9 million for the nine months ended June 30, 2024 from an outflow of $63.0 million in the 2023 period. The increase was driven by proceeds of $51.6 million from the divestiture of U.S. Lawns, combined with a $11.9 million decrease in capital expenditures, a $13.8 million decrease in cash used for acquisitions and a $7.3 million increase in proceeds from the sale of property plant and equipment in comparison to the prior period.

Current wording

Net cash used by investing activities increased $46.7 million to $55.3 million for the three months ended December 31, 2024 from $8.6 million in the 2023 period. The increase was driven by a $48.6 million increase in capital expenditures, partially offset by a $1.4 million increase in proceeds from the sale of property plant and equipment in comparison to the prior period.

Previous wording

Net cash flows used in financing activities of $126.1 million for the nine months ended June 30, 2024 included repayments of the Receivable Financing Agreement of $82.2M, repayments of finance lease obligations of $26.4 million, Series A preferred stock dividends of $8.9 million, and contingent business acquisition payments of $4.7 million.

Current wording

Net cash flows used by financing activities of $47.3 million for the three months ended December 31, 2024 included a decrease in book overdrafts of $17.0 million, repayments of finance lease obligations of $10.7 million, Series A preferred stock dividends of $9.0 million, repayments of our Receivables Financing Agreement of $8.4 million, and repurchase of common stock and distributions of $5.1 million.

Previous wording

Free Cash Flow increased $82.0 million to $120.2 million for the nine months ended June 30, 2024 from $38.2 million in the 2023 period. The increase in Free Cash Flow was due to an increase in net cash provided by operating activities coupled with a decrease in cash used for capital expenditures, each as described above.

Current wording

Adjusted Free Cash Flow decreased $12.9 million to $4.4 million for the three months ended December 31, 2024 from $17.3 million in the 2023 period. The decrease in Adjusted Free Cash Flow was due to an increase in cash used for capital expenditures, partially offset by an increase in net cash provided by operating activities, each as described above.

Previous wording

Net working capital is defined as current assets less current liabilities. Net working capital decreased $39.9 million to $235.5 million at June 30, 2024, from $275.4 million at September 30, 2023, primarily driven by an increase in accrued expenses of 29.8 million, deferred revenue of $26.4 million and accounts payable of $4.3million, combined with a decrease in unbilled revenue of $20.0 million and a decrease in other current assets of $15 million. This was partially offset by an increase in cash and cash equivalents of $48.9 million and accounts receivable of $4.1 million.

Current wording

Net working capital is defined as current assets less current liabilities. Net working capital decreased $30.1 million to $206.7 million as of December 31, 2024, from $236.8 million as of September 30, 2024, primarily driven by a decrease in cash and cash equivalents of $42.1 million, decrease in unbilled revenue of $40.8 million, increase in deferred revenue of $28.0 million, and decrease in accounts receivable of $25.2 million. This was partially offset by a decrease in accrued expenses and other current liabilities of $69.2 million, decrease in accounts payable of $21.6 million, and increase in other current assets of $14.0 million.