BrightView(BV) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Presents the company's unaudited financial statements, management's discussion, market risk, and internal controls Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining business operations, accounting policies, revenue recognition, debt, equity, and segment performance Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity | Metric | June 30, 2025 (millions) | September 30, 2024 (millions) | Change (millions) | | :----------------------- | :----------------------- | :-------------------------- | :---------------- | | Total Assets | $3,357.2 | $3,391.8 | $(34.6) | | Total Liabilities | $1,570.5 | $1,609.4 | $(38.9) | | Total Stockholders' Equity | $1,279.6 | $1,275.3 | $4.3 | | Cash and Cash Equivalents | $79.1 | $140.4 | $(61.3) | | Accounts Receivable, net | $396.2 | $415.2 | $(19.0) | | Total Current Assets | $665.3 | $780.1 | $(114.8) | | Total Current Liabilities | $509.3 | $543.3 | $(34.0) | Consolidated Statements of Operations Details the company's revenues, expenses, and net income over specific periods | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | YoY Change (%) | | :------------------------ | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net Service Revenues | $708.3 | $738.8 | (4.1)% | $1,970.0 | $2,038.4 | (3.4)% | | Gross Profit | $170.9 | $177.6 | (3.8)% | $445.2 | $463.4 | (3.9)% | | Income from Operations | $57.6 | $49.0 | 17.6% | $79.4 | $105.0 | (24.4)% | | Net Income | $32.3 | $23.5 | 37.4% | $28.3 | $40.8 | (30.6)% | | Basic EPS | $0.16 | $0.10 | 60.0% | $0.01 | $0.09 | (88.9)% | | Diluted EPS | $0.15 | $0.10 | 50.0% | $0.01 | $0.09 | (88.9)% | Consolidated Statements of Comprehensive Income Reports net income and other comprehensive income components, reflecting total comprehensive earnings | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $32.3 | $23.5 | $28.3 | $40.8 | | Other comprehensive (loss) income | $(2.9) | $0.4 | $0.9 | $(6.4) | | Comprehensive Income | $29.4 | $23.9 | $29.2 | $34.4 | Consolidated Statements of Stockholders' Equity and Mezzanine Equity Outlines changes in stockholders' equity and mezzanine equity, including net income and repurchases - Total stockholders' equity increased from $1,275.3 million at September 30, 2024, to $1,279.6 million at June 30, 2025[16][24] - Key changes for the nine months ended June 30, 2025, include $28.3 million in net income, $13.6 million in equity-based compensation, and $14.6 million in common stock repurchases and distributions[24] Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric (millions) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | YoY Change (millions) | | :------------------------------ | :--------------------------- | :--------------------------- | :-------------------- | | Net cash provided by operating activities | $207.4 | $152.1 | $55.3 | | Net cash (used) provided by investing activities | $(179.2) | $22.9 | $(202.1) | | Net cash (used) by financing activities | $(89.5) | $(126.1) | $36.6 | | Net change in cash and cash equivalents | $(61.3) | $48.9 | $(110.2) | | Cash and cash equivalents, end of period | $79.1 | $115.9 | $(36.8) | - The increase in cash used by investing activities was driven by a $149.8 million increase in capital expenditures and a $51.6 million decrease in proceeds from divestiture[200] Notes to Unaudited Consolidated Financial Statements Provides detailed explanations and disclosures supporting the unaudited consolidated financial statements Note 1. Business Outlines the company's primary business activities and operational segments - The Company provides landscape maintenance and enhancements, landscape development, snow removal, and other landscape-related services for commercial customers across the United States[29] - BrightView operates through two reportable segments: Maintenance Services and Development Services[29] Note 2. Recent Accounting Pronouncements Details recently issued accounting pronouncements and their anticipated effects on financial reporting - The company will adopt ASU No 2023-07, Segment Reporting, retrospectively in its Form 10-K for the year ended September 30, 2025[35][36] - The company is evaluating the impact of ASU No 2023-09, Income Taxes, effective for annual periods beginning after December 15, 2024[37] - The company is evaluating the impact of ASU No 2024-03, Income Statement (Subtopic 220-40): Expense Disaggregation Disclosures, effective for annual periods beginning after December 15, 2026[38] Note 3. Revenue Presents disaggregated revenue data by service type and details future performance obligations - Revenue is disaggregated into Landscape Maintenance, Snow Removal (under Maintenance Services), and Development Services[42][43] | Revenue Type (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Landscape Maintenance | $502.9 | $516.2 | $1,200.2 | $1,256.3 | | Snow Removal | $5.9 | $8.5 | $210.7 | $221.2 | | Maintenance Services | $508.8 | $524.7 | $1,410.9 | $1,477.5 | | Development Services | $201.3 | $215.0 | $565.0 | $564.8 | | Net Service Revenues | $708.3 | $738.8 | $1,970.0 | $2,038.4 | - As of June 30, 2025, estimated future revenues for remaining performance obligations greater than one year were approximately $488.6 million, with 59% expected to be recognized in the next 12 months[45] Note 4. Accounts Receivable, net Provides a breakdown of accounts receivable, including allowances and retention | Metric (millions) | June 30, 2025 | September 30, 2024 | | :---------------- | :------------ | :----------------- | | Accounts receivable, net | $396.2 | $415.2 | | Allowance for doubtful accounts | $11.0 | $10.0 | | Retention on incomplete projects | $58.3 | $65.7 | Note 5. Property and Equipment, net Presents the composition of property and equipment and associated depreciation expenses | Metric (millions) | June 30, 2025 | September 30, 2024 | | :------------------------ | :------------ | :----------------- | | Property and equipment, net | $493.1 | $391.9 | | Operating equipment | $426.3 | $388.3 | | Transportation vehicles | $477.2 | $403.1 | | Accumulated depreciation | $563.8 | $542.6 | - Depreciation expense for property and equipment was $101.2 million for the nine months ended June 30, 2025, up from $79.8 million in the prior year[52] Note 6. Intangible Assets, Goodwill, Acquisitions, and Divestitures Details intangible assets, goodwill, and significant acquisition and divestiture activities | Metric (millions) | June 30, 2025 | September 30, 2024 | | :------------------------ | :------------ | :----------------- | | Intangible assets, net | $73.5 | $95.8 | | Goodwill | $2,015.7 | $2,015.7 | - Amortization expense for intangible assets was $22.3 million for the nine months ended June 30, 2025, down from $27.4 million in the prior year[53] - On January 12, 2024, the Company divested U.S. Lawns for $51.0 million cash, recognizing a $44.0 million gain[56] Note 7. Long-term Debt Outlines the company's long-term debt, including term loans and financing agreements | Metric (millions) | June 30, 2025 | September 30, 2024 | | :---------------- | :------------ | :----------------- | | Total debt, net | $790.7 | $802.5 | | Series B term loan | $733.7 | $732.8 | | Receivables financing agreement | $62.8 | $76.2 | - The Series B Term Loan matures on April 22, 2029, and its interest rate was amended on January 29, 2025, to Term SOFR plus 2.00% or ABR plus 1.00%[58][60] - The Revolving Credit Facility matures on April 22, 2027, and the Receivables Financing Agreement's borrowing capacity was increased to $325.0 million and extended through June 27, 2027[61][63] Note 8. Fair Value Measurements and Derivative Instruments Explains fair value measurements and the company's use of derivative financial instruments - The company's derivative financial instruments are measured at fair value, with significant inputs classified within Level 2 of the fair value hierarchy[70] - Interest rate contracts with a notional amount of $600.0 million are in place to convert variable-rate debt to fixed-rate debt[74][75] - Fuel swap agreements with a combined notional volume of 8.0 million gallons were entered into in March and April 2025 to reduce exposure to fuel price volatility[77] Note 9. Income Taxes Presents income tax expense, effective tax rates, and factors influencing tax variations | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income before income taxes | $44.9 | $33.4 | $39.0 | $58.3 | | Income tax expense | $12.6 | $9.9 | $10.7 | $17.5 | | Effective income tax rate | 28.1% | 29.6% | 27.4% | 30.0% | - The decrease in the effective tax rate for the nine months ended June 30, 2025, was primarily due to equity-based compensation shifting to a windfall position and the non-recurring gain on the U.S. Lawns divestiture in the prior fiscal year[81] Note 10. Equity-Based Compensation Describes equity-based compensation plans, grants, and associated expenses - The 2018 Omnibus Incentive Plan has 24,650,000 shares of common stock available for issuance, and the 2023 Employment Inducement Incentive Award Plan has 1,750,000 shares reserved[82][83] - For the nine months ended June 30, 2025, 747,000 restricted stock units (RSUs) were granted, and 281,000 performance stock units (PSUs) were issued, with PSUs vesting based on three-year average Adjusted EBITDA margin and land organic revenue growth[86][89] | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Equity-based compensation expense | $4.6 | $5.1 | $13.6 | $15.1 | Note 11. Commitments and Contingencies Details self-insurance reserves and potential legal commitments and contingencies - The company's self-insurance reserves for unpaid and incurred but not reported claims were $181.9 million as of June 30, 2025, an increase from $165.6 million at September 30, 2024[93] - The company is not aware of any legal proceedings or claims that it believes will have a material effect on its financial condition or results of operations[94] Note 12. Segments Presents financial performance and key metrics for the Maintenance and Development Services segments - Effective October 1, 2024, corporate expenses (executive compensation, finance, legal, IT) are allocated to segments based on revenue, with prior periods recast for consistency[97][175] | Segment Performance (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Maintenance Services Net Service Revenues | $508.8 | $524.7 | $1,410.9 | $1,477.5 | | Development Services Net Service Revenues | $201.3 | $215.0 | $565.0 | $564.8 | | Maintenance Services Segment Adjusted EBITDA | $81.7 | $80.4 | $172.7 | $166.9 | | Development Services Segment Adjusted EBITDA | $31.5 | $27.5 | $66.1 | $52.6 | | Total Capital Expenditures | $103.5 | $23.2 | $195.8 | $46.0 | Note 13. Mezzanine Equity Details the Series A Convertible Preferred Stock, including issuance and dividend terms - 500,000 shares of Series A Convertible Preferred Stock were issued for $500.0 million on August 28, 2023[100] - The Series A Preferred Stock is entitled to 7.0% cumulative dividends per annum, compounding quarterly, payable in cash or in kind[100][196] Note 14. Earnings Per Share of Common Stock Provides the calculation of basic and diluted earnings per share for common stock | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available to common shareholders | $14.9 | $9.3 | $1.0 | $9.0 | | Basic earnings per share | $0.16 | $0.10 | $0.01 | $0.09 | | Diluted earnings per share | $0.15 | $0.10 | $0.01 | $0.09 | - The calculation uses the two-class method, allocating earnings to common shares and Series A Convertible Preferred Stock based on dividend and participation rights[103] Note 15. Subsequent events Highlights significant events occurring after the reporting period, such as new legislation - The OBBBA legislation, signed July 4, 2025, reinstates 100% bonus depreciation for qualified property[105][138] - The company anticipates a favorable impact on near-term cash flows due to accelerated expensing of capital investments[105][138] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results, detailing business segments, revenue and expense components, key trends, operational performance, non-GAAP measures, liquidity, and capital resources. It highlights the impact of cost management initiatives and external factors on financial outcomes Overview Provides an overview of the company's market position and service offerings - BrightView is the largest provider of commercial landscaping services in the United States, with revenues approximately 5 times its next largest competitor[108] - The company operates through a national service model with over 280 branches, providing services ranging from landscape maintenance and enhancements to tree care and landscape development[108] - Services are considered essential and non-discretionary by its diverse commercial customer base[108] Components of Our Revenues and Expenses Details the primary components of the company's revenues and expenses - Maintenance Services revenues are primarily from recurring landscape maintenance and snow removal, often under annual contracts[113] - Development Services revenues are recognized over time using the cost-to-cost input method for landscape architecture and development projects[114] - Cost of services provided includes employee costs, subcontractor costs, purchased materials, and operating equipment/vehicle costs, with a large variable component[115] - Selling, general and administrative expense covers management, sales, administrative personnel, equity-based compensation, facility costs, and professional fees[116] Trends and Other Factors Affecting Our Business Identifies key trends, seasonality, and external factors impacting business operations - The business experiences seasonality, with higher revenues in spring/summer (fiscal Q3/Q4) and decreased landscape maintenance demand in winter, partially offset by snow removal services[122][123] - The "One BrightView" initiative aims for long-term profitable growth by streamlining operations, leveraging scale, and improving customer/employee retention[124] - Weather conditions, including snow events, hurricanes, and rainfall, can significantly impact revenues and costs[125] - The company plans to continue selective, accretive acquisitions to increase market density and expand service lines[128] - Goodwill is tested annually for impairment; as of July 1, 2024, the Maintenance reporting unit's fair value exceeded its carrying value by 9.6%, indicating potential future impairment risk if conditions trend unfavorably[134] - Economic conditions, including rising inflation, fuel prices, interest rates, and labor market fluctuations, impact costs and expenses[137] Results of Operations Analyzes the company's financial performance, including revenue, profit, and expenses | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | YoY Change (%) | | :------------------------ | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net Service Revenues | $708.3 | $738.8 | (4.1)% | $1,970.0 | $2,038.4 | (3.4)% | | Gross Profit | $170.9 | $177.6 | (3.8)% | $445.2 | $463.4 | (3.9)% | | Selling, General and Administrative Expense | $106.2 | $120.1 | (11.6)% | $343.5 | $375.0 | (8.4)% | | Income from Operations | $57.6 | $49.0 | 17.6% | $79.4 | $105.0 | (24.4)% | | Net Income | $32.3 | $23.5 | 37.4% | $28.3 | $40.8 | (30.6)% | - Selling, general and administrative expense decreased by 11.6% for the three months and 8.4% for the nine months, primarily due to cost management initiatives and reduced business transformation costs[143][153] - The nine-month net income decrease was significantly impacted by a $44.0 million gain on divestiture in the prior year that did not recur[154] Non-GAAP Financial Measures Explains and reconciles non-GAAP financial measures used for performance evaluation - Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS are used to evaluate operating results by excluding non-cash, non-recurring, and other adjustment items[163] - Adjusted Free Cash Flow, calculated as cash flows from operating activities less capital expenditures plus proceeds from asset sales, is used to assess liquidity and ability to fund investments and service debt[164] | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Adjusted EBITDA | $113.2 | $107.9 | $238.8 | $219.5 | | Adjusted Net Income | $45.5 | $48.3 | $72.6 | $68.1 | | Adjusted Free Cash Flow | $(41.3) | $31.0 | $25.8 | $120.2 | Segment Results Presents detailed financial results and performance metrics for each operating segment Maintenance Services Segment Performance | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | YoY Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net Service Revenues | $508.8 | $524.7 | (3.0)% | $1,410.9 | $1,477.5 | (4.5)% | | Segment Adjusted EBITDA | $81.7 | $80.4 | 1.6% | $172.7 | $166.9 | 3.5% | | Segment Adjusted EBITDA Margin | 16.1% | 15.3% | 80 bps | 12.2% | 11.3% | 90 bps | Development Services Segment Performance | Metric (millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | YoY Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net Service Revenues | $201.3 | $215.0 | (6.4)% | $565.0 | $564.8 | 0.0% | | Segment Adjusted EBITDA | $31.5 | $27.5 | 14.5% | $66.1 | $52.6 | 25.7% | | Segment Adjusted EBITDA Margin | 15.6% | 12.8% | 280 bps | 11.7% | 9.3% | 240 bps | - Maintenance Services revenue decrease was driven by strategic reductions of non-core businesses and a decline in core commercial landscaping[185] - Development Services revenue was flat for the nine months, with increased project volumes in the first half offset by third-quarter delays[188] Liquidity and Capital Resources Details the company's liquidity sources, cash flow, and capital resource management - Principal liquidity sources are existing cash, cash from operations, and borrowings under the Credit Agreement and Receivables Financing Agreement[191] - Net cash provided by operating activities increased by $55.3 million to $207.4 million for the nine months ended June 30, 2025[199] - Net cash used by investing activities increased by $202.1 million to $179.2 million, primarily due to a $149.8 million increase in capital expenditures and a $51.6 million decrease in divestiture proceeds[200] | Metric (millions) | June 30, 2025 | September 30, 2024 | | :---------------- | :------------ | :----------------- | | Cash and cash equivalents | $79.1 | $140.4 | | Long-term debt | $790.7 | $802.5 | Working Capital Analyzes the components and changes in the company's working capital | Metric (millions) | June 30, 2025 | September 30, 2024 | | :---------------- | :------------ | :----------------- | | Current assets | $665.3 | $780.1 | | Current liabilities | $509.3 | $543.3 | | Net working capital | $156.0 | $236.8 | - The decrease in net working capital was driven by a $61.3 million decrease in cash and cash equivalents, a $28.9 million decrease in unbilled revenue, and a $19.0 million decrease in accounts receivable[203] Description of Indebtedness Outlines the company's indebtedness and compliance with debt covenants - The company was in compliance with all debt covenants as of June 30, 2025, with no event of default[205] Contractual Obligations and Commercial Commitments Summarizes the company's contractual obligations and commercial commitments - No material changes to contractual obligations and commercial commitments since September 30, 2024[206] Critical Accounting Policies and Estimates Highlights the company's critical accounting policies and estimates - No material changes to critical accounting policies and estimates compared to the Annual Report on Form 10-K for FY2024[207] Recently Issued Accounting Policies Refers to details on recently issued accounting pronouncements - Refer to Note 2 for details on recently issued accounting pronouncements[208] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reported no material changes to its market risk during the nine months ended June 30, 2025, referring to its Annual Report on Form 10-K for detailed disclosures - No material changes to market risk disclosures during the nine months ended June 30, 2025[210] Item 4. Controls and Procedures The company's CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, at a reasonable assurance level, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of June 30, 2025, at a reasonable assurance level[212] - No material changes in internal control over financial reporting occurred during the fiscal quarter[213] PART II. OTHER INFORMATION Details legal proceedings, risk factors, equity transactions, and other required disclosures Item 1. Legal Proceedings This section refers to Note 11 of the financial statements for details on legal proceedings and commitments - Refer to Note 11 for details on legal proceedings[216] Item 1A. Risk Factors The company reported no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - No material changes to risk factors since the Annual Report on Form 10-K for FY2024[217] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the third fiscal quarter of 2025, the company repurchased 487,480 shares of common stock for approximately $6.88 million under its $100 million share repurchase program announced in March 2025 Issuer Purchases of Equity Securities (Q3 FY2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining (millions) | | :------------------------- | :--------------------- | :--------------------------- | :-------------------------------------------- | | April 1, 2025 - April 30, 2025 | 272,615 | $12.84 | $94.7 | | May 1, 2025 - May 31, 2025 | 127,740 | $15.66 | $92.7 | | June 1, 2025 - June 30, 2025 | 87,125 | $15.88 | $91.3 | | Total | 487,480 | $14.12 | $91.3 | - The company announced a $100 million share repurchase program on March 13, 2025, with no time limit[218] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities[219] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[220] Item 5. Other Information No other information was reported under this item - No other information reported[221] Item 6. Exhibits This section lists all exhibits filed or furnished as part of the report, including corporate organizational documents, preferred stock designations, and certifications by the CEO and CFO - The report includes exhibits such as the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and Certificate of Designations of Series A Convertible Preferred Stock[224] - Certifications by the CEO and CFO under the Sarbanes-Oxley Act of 2002 are filed as exhibits[224] Signatures The report was officially signed on behalf of BrightView Holdings, Inc. by Brian Jackson, Chief Accounting Officer, on August 6, 2025 - The report was signed by Brian Jackson, Chief Accounting Officer, on August 6, 2025[228]